The Guelph, Canada-based solar power company is experiencing tightening supply and demand, Canaccord said in an analyst note.
Canadian Solar raised its preliminary third quarter revenue guidance on Monday to $805 million to $815 million versus its previous estimates of $570 million to $620 million.
The company will report its third quarter earnings before the market open on Nov. 10.
The company announced earlier this year that it was planning to launch a separate company to own and operate completed power plants, a model which is known as a "Yieldco," Bloomberg reported.
"We continue to believe that quarterly earnings should have minimal impact on CSIQ shares until investors have ample details on the impending YieldCo," Canaccord Genuity added.
Shares of Canadian Solar closed down 4.66% to $20.65 on Tuesday.
Separately, TheStreet Ratings team rates CANADIAN SOLAR INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate CANADIAN SOLAR INC (CSIQ) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CANADIAN SOLAR INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 68.0% when compared to the same quarter one year ago, falling from $55.78 million to $17.86 million.
- Currently the debt-to-equity ratio of 1.84 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CSIQ has a quick ratio of 0.62, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: CSIQ