YB new stock pitches (Wed, Dec 18)

Goldman Sachs has upgraded SolarEdge Technologies, Inc. (SEDG) to Buy with a price target of $19, following an 86% decline since December 2023. The upgrade is based on the belief that estimates are bottoming out and concerns about the company's ability to address $350 million in debt by 2025 are exaggerated. Goldman Sachs views SEDG as a turnaround story with an attractive risk-reward profile at current levels. The company's restructuring efforts, including cost-cutting measures and headcount reductions, are seen as positive steps. While 2025 is expected to be a key inflection point with potential volatility in the first half, most concerns are considered priced into the stock. Goldman Sachs projects 2026 EPS at $1.64, significantly higher than the consensus estimate of $0.55, despite being slightly below consensus on revenue estimates for both 2025 and 2026. The analyst acknowledges that the call may be early but sees SEDG as an idiosyncratic and out-of-consensus Buy opportunity.

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Innoviz Technologies, a leading LiDAR provider for autonomous vehicles, is trading at 1.99x 2028 FCF after a 92% decline since 2020. The company has secured a $400M deal with Mobileye for 70,000-100,000+ vehicles starting in 2026, positioning it for significant revenue growth. With a strong balance sheet ($94M in assets), improving cash burn ($13M reduction YoY), and partnerships with major automakers like BMW and Volkswagen, Innoviz is poised for growth. The company's advanced LiDAR technology, including InnovizOne and InnovizTwo sensors, offers high performance in challenging conditions. Risks include ongoing cash burn and potential dilution, but the CEO's 15% net worth stake aligns management with shareholders. Conservative valuation models suggest a 4-6x return potential, with the stock trading at an 8-12x multiple of 2028 FCF.

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Ondo InsurTech Plc (ONDO.L) offers a patented IoT device called LeakBot that reduces home water leak claims by 70%, saving insurers $146 per policy annually. With a market cap of $30 million and $2 million in revenue, the company has 70,000 users and 80%+ gross margins. LeakBot's economics are compelling, with a $60 device charge and $2.5 monthly service fee, yielding an NPV of $85 over five years. A Swedish pilot showed 40% penetration and 50% boost in new sales. The US market presents significant potential with 2.5 million addressable households. Ondo's business model involves B2B2C sales to home insurance companies, who then provide LeakBot to policyholders for free. The device has no direct competitors and is patent-protected. Risks include management execution, but the company has multibagger potential given its unique solution and scalable business model.

Read the full article here. Read time: 4 min