Canadian Solar Inc. (NASDAQ:CSIQ) shone through a weakening solar market, meeting the challenge and rising above with a strong second-quarter that exhibited key metrics ahead of expectations.
FBR analyst Carter Driscoll reiterates an Outperform rating on shares of CSIQ, while reducing the price target from $32 to $23, which represents a 73% increase from where the shares last closed.
The solar power leader came in for the quarter with revenue of $805.7 million and gross margin of 17.2%, topping its guidance of $710 million to $760 million for revenue and 15% to 17% gross margin. Yet, the company forecasts weak third-quarter guidance of $660 million to $710 million in sales and gross margin of 14% to 16%.
Driscoll notes that investors might just be glad that guidance was not as dismal as initially feared, but at least the company “displayed astute market foresight.”
Driscoll concludes, “Furthermore, the company kept 2016 revenue guidance of $3.0B–$3.2B, but that does include project sales, for which it was less firm on the timing and amount of sales (had discussed $300M–$500M at the start of 2016). Finally, despite holding back assets in preparation for a Yield Co. IPO, CSIQ finally abandoned plans to pursue it. This should allow the company to refocus on project sales, recycling cash, and de-levering. We have lowered estimates and our price target but believe these factors are priced into the stock, and as CSIQ accelerates project sales, we believe the stock should rebound.”
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Carter Driscoll is ranked #4,002 out of 4,122 analysts. Driscoll has a 19% success rate while facing a loss of 19.5% in his annual returns. When recommending CSIQ, Driscoll loses 26.8% in average profits on the stock.
TipRanks analytics demonstrate CSIQ as a Buy. Based on 5 analysts polled in the last 3 months, 3 rate a Buy on CSIQ, 1 maintains a Hold, while 1 issues a Sell. The 12-month average price target stands at $19.56, marking an almost 48% upside from where the stock is currently trading.
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