Goldman Sachs maintained a Neutral rating on Canadian Solar (NASDAQ: CSIQ) with a price target of $30. Analyst Frank He noted Q3 topped expectations but he expressed caution on Q4 margin weakness.

"CSIQ 3Q14 core net profit of US$110mn (excluding FX loss) was well above GSe of US$60mn. The earnings beat is mainly due to higher than expected project bookings in total solution and EPC projects in Canada. Despite an upward revision to module shipment guidance from 2.5-2.7GW to 2.73-2.78GW for 2014, CSIQ guided for its gross margin in 4Q14 to be 17-19%, vs. 22.9% in 3Q14, mainly due to anti-dumping and countervailing duties imposed on US modules and currency depreciation in Japan and Europe," said He.

" . . . we believe near-term earnings pressure from the module segment may drag its overall earnings performance in 4Q14. Based on 18% gross margin assumption in 4Q14, we expect CSIQ to register net profit of US$60mn. Our sensitivity analysis shows a 1ppt change in gross margin would lead to 11% 2015E net profit revision. We revise up our EPS estimates by 7-21% for 2014E-16E on higher total solution bookings and lift our EV/GCI vs. CROCI/WACC-based 12m TP to HK$30 from HK$28," added the analyst.

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Shares of Canadian Solar closed at $31.47 yesterday.