Analysts from Canaccord Genuity and Nomura Holdings are bullish about tech companies Canadian Solar Inc. (NASDAQ:CSIQ) and Palo Alto Networks (NYSE:PANW). As Canadian Solar reports higher demand and plans to increase production, Palo Alto Networks technology continues to fly off the shelves.
Canadian Solar Inc.
Canadian Solar recently released Q3 earnings, which proved they are on track to meet their yearly goals. Analysts are buillish about the future of the company for Q4 as well as 2016. The solar power company posted revenue and EPS of $849.9 million and $0.50, respectively, exceeding analysts’ expectations of $810.8 million and $0.21, respectively. The report demonstrated an improved supply and demand ratio, enabling the company to increase their prices. Another reason for the revenue increase in Q3 was due to a portion of the company’s sale of the Tranquility project. Furthermore, management guidance surpassed analysts’ expectations for Q4, posting a revenue range of $930 to $980 million, a shipment range of 1,300MW to 1,350 MW, and 13-15% gross margins.
Going forward, the company plans to increase production capacity to keep up with its suppliers’ growing market share, although they are currently at full capacity. This increase in capacity will do the following: track demand, reduce reliance on merchant suppliers for modules, decrease module cost on economies of scale, and lower tariff impact. Specifically, this decrease in cost will allow the company to have longer term gross margins of 15-20%. Additionally, analysts are eager for YieldCo, the company’s new subsidiary which will own and operate completed plants, to enter the market so they can have a better understanding of the company’s overall demand. CSIQ believes that “if YieldCo demand remains low, 3rd party alternatives are still an option.”
Subsequently, Canaccord analyst Jonathan Dorsheimer maintained a Buy rating for Canadian Solar with a price target of $29. Dorsheimer wrote, “While Palo Alto is one of the more expensive network security names in our coverage universe and the stock has underperformed over the past quarter, we believe that it remains a core holding given the current customer focus on cyber security, as well as the company’s strong technology and market share gains. Our checks suggest another good quarter, and we maintain our Buy rating into F1Q’16 earnings.”
“From a fundamental perspective, we remain positive, as the company has product offerings that are consistently well rated in our checks and it has shown a consistent ability to take share (Palo Alto was shown as a top IT security budget gainer in our most recent CSO survey). The stock trades at about 8.4x CY16E revenues, a premium to the security software group at about 5.2x,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jonathan Dorsheimer has a total average return of -7.7% and a 36.7% success rate. Dorsheimer has a -6% average return when recommending CSIQ, and is ranked #3708 out of 3891 analysts.
Out of the 6 analysts who have rated CSIQ in the past 3 months, all 6 have rated it as Buy, according to TipRanks’ statistics. The average 12-month price target for Canadian Solar Inc. is $33.67, marking a 47.48% upside from where shares last closed.
Palo Alto Networks Inc
Analysts are bullish on Palo Alto Networks as they anticipate Q1-16 earnings, set to release on November 23 after market close. The company offers cyber-security technology that safely enables users to access websites. Analyst Frederick Grieb of Nomura Holdings states that although Palo Alto’s stock has been trading down since the company’s last earnings release, the pros outweigh the cons. Namely, “the company remains one of the strongest share gainers in its market and continues to benefit from greater awareness of cyber threats.” Related to this, he credits management for ensuring the company remains a leader in the competitive market. The analyst states that although Palo Alto’s prices are generally higher than their competitors, investors should hold on to the stock because of promising last quarter events. In the last quarter, the company gained market share and improved its technology, congruent with its customer’s cyber security needs. Furthermore, the analysts reported that 69% of the company’s resellers had higher than planned sales. Based on these findings, they expect that revenue for next quarter will be $286.4 million, higher than both the Street’s prediction of $284.3 million and the company’s guidance of $280-$284 million.
The analyst reiterated a Buy rating for Palo Alto with a price target of $200, stating “From a fundamental perspective, we remain positive, as the company has product offerings that are consistently well rated in our checks and it has shown a consistent ability to take share (Palo Alto was shown as the top IT security budget gainer in our most recent CSO survey).” Overall, Frederick Grieb has as 74% success rate recommending stocks with an average return of 23.2% per recommendation.
According to TipRanks statistics, out of the 19 analysts who have rated PANW in the last 3 months, 17 have given a Buy rating while 2 remain on the sidelines. The average 12-month price target for the stock is $200, marking a 29% upside from where shares last closed.