FBR Cuts PT on Canadian Solar (CSIQ) to $23; Q2 Pressured, but Outlook Not as Bad as Feared
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FBR & Co. trims its price target on Outperform-rated Canadian Solar (Nasdaq: CSIQ) from $32 down to $23 following recent Q2 results and outlook.
The firm noted key points from CSIQ's recently quarterly report:
- 2Q beat. CSIQ reported 2Q16 revenue of $805.7M, module shipments of 1.29 GW, and gross margin of 17.2%, ahead of its guidance of $710M.$760M for revenue, module shipments of 1.2 GW.1.25 GW, and 15%.17% gross margin, respectively.
- Late-stage pipeline grows again; U.S. to boost portfolio. The late-stage pipeline grew to 2.4 GW from 2.1 GW QOQ, and total solar power plants in operation reached 472 MW, up from 438 MW QOQ. CSIQ expects to add more than 1.0 GW of operating plants in 2016, mainly in the U.S.
- Positives include (1) it maintains annual module guidance of 5.4 GW.5.5 GW; (2) 1.185 GW of U.S.-based projects are still due to reach commercial operation in 2H16; and (3) it positioned itself for a weakening pricing environment with inventory reductions and moderation of planned capacity expansion.
- Negatives include (1) weaker 3Q revenue guidance of $660M.$710M amid ASP pressure, although this does not include $32.9M in projects sold in China expected to close in 4Q; (2) project push-outs in Japan as the government tightened interconnection time frames for projects seeking feed-in tariffs; and (3) project resale values slipped a bit as CSIQ estimated closer to $1.80/MW versus $2.00/MW prior
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