Oppenheimer analyst Colin Rusch upgraded Solaredge Technologies Inc (NASDAQ: SEDG) from Perform to Outperform and set a price target at $25.

The analyst expects growth to derive in part from new energy storage and vehicle charging products, as well as further portfolio expansions, but the company’s key driver in the near-term is the limited performance of SolarEdge’s competitors.

SolarEdge’s two biggest threats are Huawei and Enphase Energy Inc (NASDAQ: ENPH), according to Rusch, but neither company is making strides.

Huawei’s optimizer product is late in development and Rusch doubts it will even show in the market until the second half of 2018.

Enphase, meanwhile, has been working on cutting costs and is holding onto its current market share, but hasn’t been ahead of schedule at all.

Rusch also noted that another competitor, ABB Ltd (ADR) (NYSE: ABB), doesn't even seem committed to the sector any more.

The lack of competition, combined with ongoing cost declines and pricing set for high single digit declines year-over-year, is expected to drive gross margin gains even if revenue stays flat.

The company estimates annual costs will decline by over 15 percent through 2018.

“We believe the company is in position to reach its [35 percent gross margin] target for several quarters but we will be constantly evaluating the competitive landscape for changes,” said Rusch.

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