12:01 PM EDT, 10/08/2024 (MT Newswires) -- SolarEdge Technologies ( SEDG ) likely faces uncertainty around demand recovery and its ability to maintain share in a competitive European market in the next couple of years, Morgan Stanley said Tuesday.

The brokerage cut its 2025 and 2026 revenue outlooks for the company by 12% and 11%, respectively. The new guidance reflects "stable" revenue and gross margins through Q1 of 2025 from Q3 levels, which the firm said is in line with the company's recent communication around its destocking strategy.

"Given the lack of demand visibility in residential solar and the rate of deterioration in SEDG's business and market over the last year, we would expect the SEDG shares to remain under pressure until there is clear line of sight for channel inventory normalization, margins improve back towards 2021/2022 levels, and it cleans up its balance sheet," Morgan Stanley said.

The firm reduced its price target on the SolarEdge ( SEDG ) stock to $23 from $28, with an equal-weight rating.

The company's shares were down 6.2% in recent trading.

Price: 19.16, Change: -1.26, Percent Change: -6.16