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Canadian Solar Upgraded, Shares Jump 4 Pct

The Associated Press

NEW YORK (AP) — Canadian Solar Inc.'s healthy balance sheet, product line strategy and underappreciated stock prompted an analyst to upgrade the solar energy product manufacturer, sending shares jumping.

Shares of Canadian Solar rose 38 cents, or 4.1 percent, to $9.70 in morning trading.

Oppenheimer analyst Sam Dubinsky expressed concern over the solar sector as a whole but spoke favorably about Canadian Solar's potential to rebound. As the industry struggles under the weight of excess capacity, dismal first-quarter results and continued pricing pressure, Dubinksy said Canadian Solar could emerge as one of the few rallying solar stocks.

Investors were weary of the Toronto-based company's backlog of upgraded metallurgical grade (UMG) silicon, which was once a cost-effective alternative to mainstream polysilicon. Polysilicon is a key ingredient in solar cells. Dubinksy said he expects the company to de-emphasize the UMG product line and shift capacity to mainstream modules, a move that will strengthen the company's product strategy.

Canadian Solar "managed its balance sheet significantly better than peers throughout this downturn," Dubinsky said, adding that overall, the company is underappreciated. As investors view Canadian Solar's 2010 performance with caution, he believes their consensus estimate of 59 cents per share is achievable, with room for upside.

The company said it will release its first-quarter results and business outlook on May 26.

He upgraded the stock to "Outperform" from "Perform," with a $14 price target.