Throughout a company’s existence it is inevitable that it will have to deal with adversity. Below, analyst Jonathan Dorsheimer of Canaccord discusses how Canadian Solar Inc. (NASDAQ:CSIQ) is intending to recover from a tragic tornado that hit one of its factories.
This past week Canadian Solar’s cell factory in Funing, China was hit with a severe tornado. The storm caused property damage as well as injuries to employees. Expectations were that the factory would contribute 15%-20% of the cells that Canadian Solar needs for this quarter.
Canadian Solar is keeping its shipment expectations and consequently decided to increase its output at its Suzhou and Thailand factories as well purchasing third-party supplied cells, in order to reach its intended capacity. The company believes any financial losses from the tornado will be countered by payments from its insurance.
The stock dropped significantly following the tornado and the analyst believes this decline presents an opportunity for investors to buy at a low price due to his opinion that Canadian Solar will outperform its competitors.
In addition, Canadian Solar is currently struggling to figure out what to do with its wind and solar farm assets due to investors concern regarding the formation yieldcos, separate holding companies, to buy and operate them. The company’s management has suggested that the top alternative to yieldcos would be to sell assets. The analyst expects a sale to occur in 2H/16, but he emphasizes time will indicate a clearer picture of the company’s plans.
Dorsheimer maintains a Buy rating for shares of Canadian Solar with a price target of $29, marking a 110% increase from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jonathan Dorsheimer has a yearly average return of -7.9% and a 37% success rate. Dorsheimer has a -28.2% average return when recommending CSIQ, and is ranked #3709 out of 3967 analysts.
As of this writing, all 6 analysts who have rated the company in the past 3 months gave it a Buy rating. The average 12-month price target for the stock is $28.33, marking a 108.91% upside from current levels.