TD Cowen lowers SMA Solar Technology stock price target on weak demand

TD Cowen has reduced its price target on SMA Solar Technology AG to EUR18.00 while maintaining a Hold rating, citing deteriorating demand in residential and commercial & industrial segments that led SMA Solar to lower its 2025 revenue and significantly cut EBITDA guidance. This continued weakness in Europe is viewed by TD Cowen as a negative indicator for U.S. solar peers like SolarEdge Technologies and Enphase Energy. The firm emphasized that robust second-half 2025 utility bookings will be crucial to support 2026 revenue expectations, particularly given declining product backlog and recent declines in U.S. utility order intake due to policy uncertainty.

Analysis

TD Cowen has lowered its price target on SMA Solar Technology AG to EUR18.00 from EUR20.00, maintaining a Hold rating, in response to deteriorating demand conditions. The downgrade was prompted by a 3% midpoint reduction in SMA's 2025 revenue guidance and a significant cut to its EBITDA forecast, which was impacted by one-time items. This weakness, concentrated in European residential and commercial segments, is viewed as a negative leading indicator for U.S.-based peers SolarEdge Technologies (SEDG) and Enphase Energy (ENPH). The analysis underscores a precarious outlook, with a declining product backlog making second-half 2025 utility bookings a critical factor for achieving stable revenue in 2026. Compounding these challenges, U.S. utility order intake also declined in the second quarter of 2025 as customers paused decisions amid tariff and policy uncertainty, indicating broad geographical headwinds for the sector. The new price target is based on a 5x multiple of TD Cowen's 2026 EV/EBITDA estimate, with a 10% EBITDA margin projected for 2027 contingent on successful cost reductions.

Key Decisions for Investors

• Investors in SolarEdge (SEDG) and Enphase Energy (ENPH) should treat SMA Solar's lowered guidance as a negative read-through, signaling persistent demand weakness in the key European market that could impact their own performance.
• Closely monitor utility segment order intake and backlog data for the second half of 2025, as a recovery in bookings is now crucial to validate 2026 revenue forecasts for the entire solar inverter sector.
• Given the dual headwinds of soft European demand and U.S. policy uncertainty, it may be prudent to exercise caution before initiating or adding to positions in the solar inverter sub-sector until there are clearer signs of a cyclical recovery or policy resolution.