SHLS - Canadian Solar raised to Buy at UBS as CSI Solar value 'underappreciated'

2023-07-06 12:44:14 ET

Canadian Solar ( NASDAQ: CSIQ ) -1.4% in Thursday's trading despite a UBS upgrade to Buy from Neutral with a $50 price target, raised from $48, saying its sum-of-the-parts analysis shows the value of the company's holdings in CSI Solar A-shares is "likely underappreciated" by the market.

With the stock currently pricing in just 17% of the value of the A-shares, UBS Jon Windham said he sees upside potential driven by a narrowing of the valuation gap, with key catalysts including Q2 earnings, which will include the 2023 CSI Solar carve-out listing, and the potential for Canadian Solar ( CSIQ ) buybacks in the longer term.

While preferring more concentrated U.S. utility-scale renewables exposure such as Array Technologies ( ARRY ) and Shoals Technologies ( SHLS ), Windham thinks Canadian Solar ( CSIQ ) is positioned to benefit from Inflation Reduction Act incentives through its Recurrent Energy development business and planned 5 GW module assembly facility in Texas.

More on Canadian Solar:

• Financial and valuation comparison to sector peers
• Analysis: Canadian Solar: IPO Catalyst To Price In
• Stock price return: Up 24% YTD, up 29% in the past 12 months

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