Canadian Solar, Inc. – ADS (CSIQ) is a low cost, vertically-integrated solar module producer with predominantly China-based manufacturing assets. In the near-term, fortunes look to be impacted by the industry-wide oversupply glut, leading to sharply falling average selling prices, tepid module demand in Europe, and rising competition in the market.
Furthermore, adjusted loss per ADS of $1.24 in its third quarter of 2011 was way below the Zacks Consensus Estimate of $0.51 loss. Given the industry wide high inventory level, we do not foresee any short-term improvement in margins of the company. So we advise investors to exit from the stock for now and look for a favorable entry point in the future.
Canadian Solar is also undergoing a review by the International Trade Commission due to a complaint by Westinghouse Solar Inc. In the complaint Westinghouse Solar accused Canadian Solar of patent rights infringement.
