How Do Analysts Rate Canadian Solar ahead of 3Q16 Results?
Of the nine analysts covering Canadian Solar (CSIQ) stock, five analysts gave the company a “buy” rating, three analysts gave a “hold” rating, and one analyst had a “sell” rating on CSIQ stock as of November 14, 2016.
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As of November 14, 2016, Canadian Solar’s consensus 12-month target price was $18.84, which indicates a nearly 58% return potential considering an $11.90 closing price on November 14, 2016.
Canadian Solar’s consensus estimates
Analysts expect Canadian Solar to report muted 3Q16 earnings. They expect CSIQ to report EPS (earning per share) of $0.24 as compared to $0.68 in 2Q16 and $0.53 reported during the corresponding period in 2015.
Analysts expect CSIQ’s EBITDA (earnings before interest, tax, depreciation, and amortization) and EBITDA margins to remain nearly unchanged sequentially. However, they see a marginal decline in EBITDA on a YoY (year-over-year) basis. It’s important to note that the profit margins of upstream solar companies like Canadian Solar, SunEdison (SUNEQ), SunPower (SPWR), Trina Solar (TSL), and First Solar (FSLR) can fluctuate depending on the revenue recognition from their ongoing power projects in a particular period.
Among the major upstream solar (TAN) companies, analysts recommend a “buy” for Canadian Solar. The recommendation was primarily due to the diversification of the company’s business across geographies as well as the strong and growing project pipeline and a diversified customer base.
Among the nine firms covering Canadian Solar stock, Morgan Stanley (MS) is “underweight” on the stock with a price target of $12.8. Barclays is “equalweight” on the stock with a price target of $14.0 assigned on September 1, 2016. In contrast, JPMorgan Chase (JPM) has an “overweight” recommendation on the stock with a price target of $18.0 assigned on August 18, 2016.
In the next part of this series, we’ll analyze analysts’ 3Q16 revenue estimates for Canadian Solar. We’ll find out whether these recommendations are conservative or optimistic.