The latest quarterly results were mixed from Canadian Solar (Canadian Solar Stock Quote, Charts, News, Analysts, Financials NASDAQ:CSIQ), according to Roth Capital Partners analyst Philip Shen, who delivered a report to clients on the company on Wednesday where he reiterated a “Buy” rating on the stock.
Canadian Solar, which makes solar photovoltaic modules, has solar and battery storage solutions and is a developer of utility-scale solar power and battery storage projects, announced its third quarter 2022 numbers on Tuesday. The company reported revenue up 57 per cent year-over-year to $1.93 billion and a 123 per cent jump in net income attributable to Canadian Solar of $1.12 per diluted share. Canadian Solar also said it saw a 62 per cent increase in solar module shipments over the quarter to 6.0 GW.
“We continue to execute our long-term strategy and build on our competitive position with a further expansion of our upstream capacity and increased level of vertical integration in our solar manufacturing capacity,” said Shawn Qu, Chairman and CEO, in a press release.
“The benefits of greater control over our supply chain and an improved cost structure will further strengthen our competitive moat, driving a differentiated value proposition for our customers through better products with lower carbon footprint,” he said.
On the Q3 results, Shen said the $1.9 billion topline was lower than management’s previously-stated guidance at between $2.0 and $2.1 billion, while also being lower than the consensus estimate at $2.1 billion and Roth’s own estimate at $2.0 billion. Shen said the lower-than-expected revenue was due to lower project sales, lower battery storage sales and modestly lower module ASP’s.
At the same time, Shen noted that the Q3 gross margin of 18.8 per cent was well above guidance at between 15.0 and 16.5 per cent, as well as better than the Street’s call at 15.7 per cent and Roth’s 16.2 per cent.
“CSIQ delivered a mixed Q3/healthy 2023 guidance. The margin outlook appears healthy with potential for operating leverage in the years ahead,” Shen wrote.
“Importantly, the China IPO—critical for capacity expansion—has gotten back on track following a one-month pause. Management appears to be exploring a 5GW US module facility at a minimum under IRA,” he said.
“[CSIQ] is trading at ~7x consensus 2023 EBITDA. We look for shares to trade higher on sustained solar demand, though overcapacity/ASP declines could be a risk in H2’23,” Shen said.
With his “Buy” rating, Shen $55.00 target price, which at press time represented a projected one-year return of 52.6 per cent.