Canadian Solar (CSIQ) Remains Neutral-Rated at Goldman Sachs

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.

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

Shares of Canadian Solar closed at $31.47 yesterday.

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