SolarEdge Technologies' (SEDG) outlook points to continued revenue and margin growth in its core solar business, helped by operational improvements, its Nexis platform and higher battery energy storage system attachment rates, RBC Capital Markets said in a note Friday.

Management's guidance of $2.4 billion in 2029 revenue, including $1.8 billion from its core solar business and $600 million from solid-state transformers, highlights a potentially significant longer-term opportunity, with gross margin expected to reach about 35% by 2029, according to the note.

The company's solid-state transformer technology for artificial intelligence data centers offers a "compelling" value proposition, but the investment firm said more evidence of commercial adoption is needed given competitive risks. RBC said it models $300 million of transformer revenue in 2029.

The firm said it also expects the Nexis platform to support higher solar sales and margins, while $1.7 billion in firm safe harbor inverter orders provides additional demand visibility.

RBC raised its price target to $30 from $24, and has a sector perform, speculative risk rating on SolarEdge Technologies.

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