Auriga, Citi Maintain Buy On Trina Solar (TSL); HSBC Downgrades

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08:29:35 am on August 25, 2010

Following Trina Solar’s (TSL) earnings results, at least two firms remain bullish on the stock – Auriga and Citi.  HSBC wasn’t as impressed and downgraded the stock.

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Auriga reiterates its Buy rating and raised the price target from $36 to $41.

“Management did not disappoint investors with a strong beat and raise scenario on the Q2 conference. However, after raising estimates ahead of the call last week, we now find ourselves increasing both our estimates and price target again. We fully expected management to raise 2010 shipment guidance, which they did, but the surprise to our model came on the guidance of capacity reaching 1500MW in 2011 versus our prior estimate of 1300MW. In our view, the stock was inexpensive heading into the call, and now appears more undervalued at just 8.2x our 2011E EPS after the call. A long position in shares of Trina Solar (TSL, Buy) is one of our top ideas in the solar sector and we find the shares significantly mispriced as these levels. We are

Citi also reiterates its Buy rating and raised the price target from $30 to $36.

“Consistent with our bullish initiation of coverage on 7/11/10, this report confirms the view that Street estimates for 2H:10 and 2011 are way too low. Despite being more cautious than TSL on pricing, we are nonetheless
raising F2010 revs/EPS from ~$1.45B/$2.56 to ~$1.56B/$3.09 and F2011 revs/EPS from ~$1.7B/$2.81 to ~$1.88B/$3.68 (Street $2.65). Using ~10x our new C2011 (about in-line w/Chinese peers)…TSL remains our favorite name in the solar sector given its strong balance sheet, more measured approach to the systems business, leading cost position, and budding track record for execution.”

HSBC downgraded the stock from Overweight to Neutral and lowered the price target from $31 to $27.

After opening down yesterday, shares of TSL found support at the 50 day moving average and rallied into the close, finishing up nearly 6% on a weak day in the overall market.  A break above 24.45 would be significantly bullish and would signal a move up to the next level of resistance around the $27 level.

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