Canadian Solar: Buy, Sell or Hold?

Citi analyst Vikram Bagri says Canadian Solar’s (Canadian Solar Stock Quote, Chart, News, Analysts, Financials NASDAQ:CSIQ) Q2 results were mixed, with strong storage shipments offset by weak margins and higher costs.

As reported by the Globe and Mail, Bagri maintained his “Neutral” rating on Canadian Solar in an Aug. 28 update, and lowered his target to US$15.00 from $18.00.

The average target is US$11.90.

“The 2Q results were consequential for both FSLR (First Solar) and CSIQ,” Bagri said.

Canadian Solar reported Q2 revenue of US$1.2-billion, at the high end of guidance and up 12% sequentially, but down 29% year-over-year. Gross margin was 13.9%, in line with guidance.

Energy storage shipments were 3.7 gigawatt-hours, above guidance of 2.8 to 3.2 gigawatt-hours. Solar module shipments were 3.1 gigawatts, up 25% sequentially but down 60% from a year earlier.

Bagri said the revenue beat was driven by strong storage shipments despite weak solar module pricing and lower PV shipments. He said the bottom-line miss reflected logistics and ramp-up costs.

Canadian Solar reported a net loss of US$77-million, or US$1.40 per share, compared with a loss of US$32-million in Q1 and net income of US$7-million a year earlier.

CEO Colin Parkin said U.S. manufacturing remains central to the company’s strategy. Canadian Solar opened the first phase of its HJT solar cell factory in Jeffersonville, Ind., and expects to expand nameplate cell capacity to 6.3 gigawatts in the first half of 2027.

Bagri said management highlighted Section 232 as positive for domestic manufacturers and disclosed domestic module pricing of US$0.35 per watt before Section 232.

The analyst said Canadian Solar also outlined a technology roadmap that includes multiple solar technologies and sodium-ion storage.

Management expects Q3 margins to remain stable, though ramp-up costs at the Indiana cell facility are expected to weigh on profitability for the rest of the year. It also expects U.S. solar and storage shipments to accelerate in the second half.

Bagri said 2027 is likely to be a transition year for Canadian Solar.

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