Roth Capital affirms Canadian Solar (Nasdaq: CSIQ) at Buy with a price target of $40 following Q1 results and outlook.

Analyst Philip Shen noted that Canadian Solar's strong Q1 reults came on the back of solid shipment volume and pull-forward of Q2 projects. This caused Canadian Solar to issue what the market perceived as "weak" guidance for the current quarter.

Shen commented on the outlook: "in our view, is likely misplaced. The Q2 guide highlights the lack of contribution by the rich pipeline of Canadian historical projects and the weaker economics of the core manufacturing business. Instead of selling projects, the company is now keeping solar assets on its balance sheet until it launches its yieldco. Q2 may represent an "air pocket" until yieldco details emerge, which will likely highlight the value creation enabled by the new entity."

Following results, Shen moves his FY15 gross margin outlook from 18.2 percent down to 16 percent (on lower ASP expectations) and EPS from $2.78 down to $2.10.

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