Cowen is out positive on Trina Solar (NYSE:TSL) this morning raising their Street high 2008 estimates to to reflect the new GCL supply deal, which boosts secured silicon to 95% of targeted production. We believe Street consensus is too low on operating margin, and too high on interest expense (poly plant interest should be capitalized). Silicon coverage for 2009 also looks good, with perhaps 15% still to come from new sources.
Raising 2008E E/ADS To $4.05 Vs. Prior $3.64, Street $2.90. They raised revenue to $750MM (vs. prior $710MM, St. $709MM), based on shipments of 195MW (in line with 95% coverage of 200-210MW target). Since 15% of poly is covered by the new contract, they boosted GM by 50 b.p., to 23.8% (vs. St. 23.1%).
Sees 50%+ upside vs. the market in 12 months and reiterates Outperform.
Notablecalls: Cowen's one of the best firms covering the Solar space. I suspect TSL will trade up today. I see a possible squeeze developing.
We have similar (though more exuberant ) thoughts about Cowen:
Solar: Cowen & Co. Analysts Are Demi-Gods
Solar Stocks on a Rampage (ENER; ESLR;FSLR; LDK: SPWR; STP; YGE)