Canadian Solar stock poised for rebound on margin outlook, says Phase IV

Investing.com - Canadian Solar Inc. stock surged 7.8% in mid-day trading today, touching a session high of $11.27 before trading at $11.24, in a sharp technical rebound after shares briefly touched their 52-week low of $10.34 at the open, a level that appears to have attracted a wave of buyers.

Canadian Solar Inc. (NASDAQ: CSIQ) shares could double on metric improvements as the company faces a short interest exceeding 30%, according to Phase IV Research.

The research firm said the stock has declined as interest rates rose, with quantitative models tied to the company's debt load processing known losses while not accounting for future performance until visibility improves. Phase IV Research set a price target of $1.81 for the shares.

The firm said gross margins are expected to improve when the company's Indiana facility ramps production. Canadian Solar's Indiana plant uses heterojunction technology to manufacture solar modules.

Phase IV Research said rising average selling prices would provide additional upside for the stock. The firm cited data center power requirements, potential congressional changes, and projects under the Inflation Reduction Act as factors supporting solar demand.

The research firm said Canadian Solar's domestic manufacturing positions the company to sell into a protected U.S. market as global solar panel oversupply conditions ease. Short sellers are using high-frequency trading strategies to cover positions, according to Phase IV Research.

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