Analyst Vishal Shah of Deutsche Bank thinks risk/reward in SolarCity (NASDAQ: SCTY) and SunPower Corporation (NASDAQ: SPWR) remains attractive but he thinks the stocks could be range bound near-term. Comments follow Canadian Solar, Inc. (NASDAQ: CSIQ) Q1 results.

"Canadian Solar reported Q1 results this morning which were below consensus expectations but management highlighted improving policy conversations in China, solid demand in Japan, and ASP strength into Q2. However, we expect US trade case uncertainty and low Chinese policy/install visibility to remain a near term overhang on solar stocks. That said, considering the recent sell-off and optionality resulting from the upcoming US/Taiwan trade case, China policy, yieldco, we believe risk-reward for Solar City (SCTY; Buy; $51.25), SunPower (SPWR; Buy; $31.77) remains attractive," said Shah.

"Management commentary on the call confirmed seasonally weak Q1 demand in China, but the company highlighted extensive ongoing policy meetings with government officials and believes 2015 could show an uptick in the DG market as policy is sorted out. CSIQ has one project currently connected to the grid in China and expects to add another shortly. Payment times experienced discussed by management for the feed in tariff are in the 3-4 month time-frame (assuming VAT tax is paid) while electricity payments are received within a month. CSIQ shipment guide does not include a large % of Chinese shipments, but the company has ~290MW of Chinese pipeline in permitting or construction. Although we believe management’s 11-12GW target likely assumes a policy change, management suggested 14GW is still possible this year. However, we believe stocks are likely to remain range bound until policy is sorted out," he added.

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

Shares of SolarCity closed at $51.25 yesterday.