UPDATE: Barclays Cuts Canadian Solar (CSIQ) at Equalweight as Analyst Turns Cautious on Leverage
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(Updated - August 24, 2016 9:48 AM EDT)
(Updated corrects article to indicate downgrade and adds comments)
Barclays downgraded Canadian Solar (NASDAQ: CSIQ) from Overweight to Equalweight with a price target of $14.00 (from $24.00). Analyst Jon Windham said he is "cautious on leverage."
"CSIQ's 5.9x 2016E net-debt/EBITDA poses a greater risk relative to the other names in our coverage such as FSLR ($20/sh YE16E net cash) or CAFD (contracted, stable cash flows) heading into a margin-challenged 2017E. While management has taken a slightly more cautious stance on capacity expansion and asset monetization, we think the key takeaway here is really the broader (and unavoidable) issue of unintended consequences of government policy distorting the solar supply/demand relationship on a global scale," said Windham.
"We now expect gross margin of 12.7% in 2017E, down from 16.2% in 2016E. We estimate 2016/17/18 adj. EPS of $2.00/$1.54/$1.66, from $2.35 /$2.65/$3.15 previously," added the analyst.
Shares of Canadian Solar closed at $13.46 yesterday.
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