Thursday, July 16, 2009

Canadian Solar: Oppenheimer calling for a big Q3; target raised to $19, Nomura Upgrades to Buy (CSIQ)

The stock was recently trading at $13.72, up 8.32%. From Notable Calls:
Oppenheimer is out very positive on Canadian Solar (NASDAQ:CSIQ) raising their tgt to $19 from $14 following checks at Intersolar. Firm notes they are growing more positive on CSIQ as they believe high cost inventory has been burned through, units and margins should rebound, and 3Q Street estimates could prove conservative. They remain cautious on the sector overall, but believe CSIQ shares still have room to run.

Intersolar checks. Opco met with companies across the solar supply chain and left feeling more comfortable with 3Q demand trends, but less comfortable with industry ASPs and 2H linearity (4Q should be down sequentially vs. Street expectations, which model-in linear growth). Still, they believe CSIQ's story is intact and feel comfortable with their 5/21 upgrade.

Costs approaching $1.50/watt. CSIQ has burned through its high cost inventory and can now produce modules near $1.50/watt (~$0.90/watt for wafers and ~$0.60/watt for cell/module processing). With this cost structure, CSIQ can price aggressively to gain share while easily maintaining a mid-teens or better gross margin....MORE