Bulls of the Day: Analysts Weigh In on Canadian Solar Inc. (CSIQ) and Freeport-McMoRan Inc (FCX)

Analysts weighed in today on solar panel maker Canadian Solar Inc. (NASDAQ:CSIQ) and natural resource company Freeport-McMoRan Inc (NYSE:FCX). The analysts reflect on CSIQ’s Q4 pre-announcement, and FCX’s decision to sell a 13% interest in its Morenci mine for $1 billion. Below are the ratings along with current price targets and comments.

Canadian Solar Inc.

Canadian Solar shares jumped nearly 17% today after the company updated its fourth-quarter revenue guide upwards to include a result between $1.02B and $1.07B. Gross margins will be above the high end of the previously guided 13% – 15% range, suggesting strong ASPs in the quarter.

Canaccord analyst Jonathan Dorsheimer was the first to comment: “We maintain our BUY rating on Canadian Solar following the positive update. Although this update is a clear positive, we will wait for the company’s full results and commentary for Q4 before publishing model and estimate updates.”

“We have received no update on the company’s build-to-hold assets. Our last update confirms that Canadian Solar targets a YieldCo for dropdown assets for mid-2016. The company hopes to have the large portion of its YieldCo assets hooked up to electricity in order to reduce risk. We continue to discount the YieldCo’s valuation on conservative estimates and assumptions. Canadian Solar maintains its stance that, if YieldCo demand remains low, 3rd party alternatives are still an option,” the analyst added.

Dorsheimer reiterated a Buy rating on shares of Canadian Solar, with a price target of $35, which represents a potential upside of 84% from where the stock is currently trading.

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 -8% and a 33.6% success rate. Dorsheimer has a -25.5% average return when recommending CSIQ, and is ranked #3356 out of 3579 analysts.

As of this writing all the 4 analysts polled by TipRanks (in the past 3 months) rate Canadian Solar stock a Buy. With a return potential of nearly 73%, the stock’s consensus target price stands at $33.25.

Freeport-McMoRan Inc

Freeport-McMoRan shares soared nearly 12% after the company announced that it had agreed to sell a 13% ownership stake in its Morenci mine for $1 billion to its joint-venture partner in the Arizona mine, Japan-based Sumitomo.

In reaction, UBS analyst Matt Murphy raised his price target for the stock from $6.00 to $6.50, while reiterating a Buy rating.

Murphy commented, “The deal is a significant positive for FCX in our view. The valuation suggests quality assets continue to command premiums, and that the market for mining assets remains less of a buyer’s market than expected. FCX referred to the transaction as an “initial step” and they expect further asset sales as FCX works towards its goal of $5-10B in asset sales. By alleviating immediate covenant concerns the deal also buys FCX some time to execute on further asset sales should that time be required.”

According to TipRanks.com, analyst Matt Murphy has a yearly average return of 2% and a 80% success rate. Murphy has a 48% average return when recommending FCX, and is ranked #1601 out of 3579 analysts.

Out of the 7 analysts polled by TipRanks (in the past 3 months), 2 rate Freeport-McMoRan stock a Buy, while 5 rate the stock a Hold. With a return potential of less than one percent, the stock’s consensus target price stands at $6.21.


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