Trina Solar (TSL) On-Track to Reach Capacity Targets, but Poly Pricing Risk Remains

Roth Capital maintains Trina Solar (NYSE: TSL) at Buy with a $25 price target following the company's recent Q1 results and outlook.

Analyst Philip Shen said Trina's Q1 shipments of 558-MW fell in-line with preannounced numbers and the firm's expectations.

During Q1, TSL expanded capacity to (1) 2.0GW ingot (+400MW QoQ, primarily due to a furnace upgrade); (2) 1.6GW wafer (+200MW QoQ); (3) 2.5GW cell (flat QoQ); and (4) 3.0GW module (+200MW QoQ). TSL increased its YE’14 ingot target to 2.2GW from 1.7GW and reiterated its targets of (1) 1.7GW of wafer (+100MW incremental vs. Q1); (2) 3.0GW cell (+500MW incremental vs. Q1); and (3) 3.8GW module (+800MW incremental vs. Q1). Management expects to deploy $215-230mn of capex in 2014 vs. its prior expectation of $230-250mn, Shen noted.

Looking forward, Shen's FY14 gross margin outlook moves from 16.6 percent down to 16.0 percent to upside risk to poly pricing, but shipments increase from 3.6-GW up to 3.9-GW.

Bottom line: TSL handily exceeded expectations. Although we’ve adjusted 2014 margins lower, we believe shipment volumes will come in higher-than-expected following SNEC. With its healthy B/S, ability to expand capacity, and growing pipeline business, our thesis that TSL will continue to win share and improve its earnings power remains intact.

For an analyst ratings summary and ratings history on Trina Solar click here. For more ratings news on Trina Solar click here.

Shares of Trina Solar closed at $13.56 yesterday.

You May Also Be Interested In

• Munich Re (MUV2:GR) (MURGY) PT Raised to EUR464 at RBC Capital
• Sherwin-Williams (SHW) PT Lowered to $380 at Loop Capital
• Kering SA (KER:FP) (PPRUY) PT Lowered to EUR430 at RBC Capital