Roth Capital Trims PT on Canadian Solar (CSIQ) Following Q2 Results, Outlook; Notes Yieldco Remains 'on Track'

Roth Capital affirms Canadian Solar (Nasdaq: CSIQ) with a Buy rating, but lowers its price target from $46 to $40 following Q2 results and outlook issued Tuesday night.

Analyst Philip Shen offered the following overall thoughts: What differentiates CSIQ vs. peers, in our view, is the company's robust downstream strategy; it is the only company in our module coverage universe that has a legitimate near-term path to launching a yieldco. Although yieldcos are no longer in vogue—for now —we fundamentally believe the quality of solar asset cash flows are high and that there is tremendous amount of growth ahead. We expect demand for these assets to come back and with it a meaningful competitive advantage.

Management indicated that its yieldco launch remains on track for a YE'15 or early 2016 launch, and the confidential filing could occur soon. Hypothetically, if CSIQ were not successful in launching its yieldco, the company would still be able to recycle its capital by selling its assets. Management believes this could drive $1bn of revenue in 2015, and we estimate this could represent ~$2.50 of EPS. A key upside catalyst that we see ahead is the potential announcement of a strategic financing partner that could provide a series of facilities.

Shen maintains an outlook for FY15 revenue of $2.8 billion, but trims the firm's gross margin outlook from 16.3 percent down to 15.7 percent.

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

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