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Canadian Solar Gains on Bullish View From Biggest Solar Bear

  • Project portfolio is ‘golden egg,’ Axiom’s Johnson says
  • Manufacturer sold two solar farms in China for $100 million

Canadian Solar Inc. gained the most in almost eight weeks after an analyst said North America’s largest photovoltaic company is undervalued because it has an extensive portfolio of power plants under development.

The Guelph, Ontario-based company increased 5.6 percent Monday to $13.43 at 11:54 a.m. in New York, after climbing as much as 6.6 percent, the most intraday since Feb. 21.

Canadian Solar’s “‘golden egg’ is its chunky project portfolio, implying significant value upside,” Gordon Johnson, an analyst at Axiom Capital Management Inc., said in a research note Monday. Johnson, the solar industry’s most notorious bear, is initiating coverage with a buy rating and forecast a year-end price target of $18.

The manufacturer, which owns solar developer Recurrent Energy, typically builds and sells projects, recycling capital. Earlier this month, it sold two solar farms in China for about $100 million.

“With its sellable, in-the-money, U.S., Chinese and Japanese solar assets, we see Canadian Solar’s positioning today similar to that of First Solar and SunPower in mid-2012,” when they faced a global solar slump, Johnson said in the note.

His bullish outlook on Canadian Solar comes as First Solar Inc. and SunPower Corp., its two primary North American panel competitors, struggle with depressed module prices. Both companies are restructuring their operations, and First Solar has said it may divest its stake in their 8Point3 Energy Partners LP joint venture yieldco.

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