Shares of SolarEdge jumped nearly 12% during premarket trading on Tuesday after the company topped expectations during the second quarter and provided an upbeat forecast.

SolarEdge’s results come as the chip shortage and the rising cost of raw materials has weighed on the solar sector broadly.

“We are successfully navigating through the challenging supply chain environment while continuing to support our customers’ growth and expansion with new and existing products,” Zvi Lando, chief executive officer at SolarEdge, said in a statement.

The company reported adjusted earnings of $1.28 for the quarter, which was above the 89 cents analysts were expecting, according to estimates from StreetAccount. Revenue came in at $480.1 million, also ahead of the expected $455.9 million.

Looking ahead to the third quarter, the company envisions revenue coming in between $520 million and $540 million, while the Street had been expecting a forecast of $504.5 million.

Citi upgraded the stock to a buy rating following the quarterly update, pointing to SolarEdge’s expansion into the residential storage space as an upside catalyst. The company signed an agreement with Samsung for cells to help ramp its energy storage product into 2022.

Citi also raised its target on the stock from $300 to $360, which is 40% above where shares closed on Monday.

“SEDG benefited from the sales of power optimizers associated with its new commercial inverter and delivered more favorable margins than expected across both solar/non-solar segments,” added Piper Sandler, which has an overweight rating on the stock.

Back in May, SolarEdge executives warned that the company could experience margin erosion thanks to ocean freight prices doubling. Last week, both Generac and Enphase warned that supply couldn’t keep up with demand amid a boom in the solar market and supply chain bottlenecks.

“We viewed component shortages as a top risk heading into the call and as such SEDG’s ability to demonstrate line of sight to execution near-term stands out as a positive,” said research firm Truist. “With underperformance into the print, we see pricing power, battery deployment, and supply chain pressures abating all driving a rebound in the shares near-term.”

The firm reiterated its buy rating on the company following earnings, and also lifted its price target on the stock to $340 from $325.

Shares of SolarEdge are down 19% for the year through Monday’s close.