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On Tuesday, Citi analyst Vikram Bagri revised the price target for Canadian Solar (NASDAQ:CSIQ) to $10.00, a decrease from the previous $11.00 target, while maintaining a Sell rating on the stock. The adjustment follows Canadian Solar’s fourth-quarter earnings report, which included a number of one-time items that impacted results. This analysis aligns with broader market sentiment, as shown by InvestingPro data, which reveals that 5 analysts have recently revised their earnings expectations downward for key industry player Fluence Energy .
The company’s module and storage shipments for the quarter were reported to be consistent with expectations, but gross margins fell approximately 270 basis points below the provided guidance. Despite the average selling price (ASP) pressures, Canadian Solar’s management highlighted that storage margins remained above 20% in the fourth quarter. The margin shortfall was attributed primarily to impairment and tariff-related factors. For context, InvestingPro data shows that industry peer Fluence Energy operates with notably lower gross margins of 12.93%, highlighting the broader margin pressures in the energy storage sector.
For the first quarter, Canadian Solar anticipates lower storage shipments of 0.8 gigawatt-hours (GWh), which is expected to bring gross margins down to 10%, marking the lowest start to a year for the company since 2018. However, management remains optimistic about the potential for gross margin improvement throughout the year, citing factors such as higher storage shipments, improved module pricing in China during the first half of the year, and a greater mix of US domestic content.
Despite these potential positives, Citi’s analysis projects fiscal year 2025 revenues for Canadian Solar at $6.3 billion, which is significantly lower than the company’s own guidance of $7.8 billion. The forecast reflects the intense competition in the storage market and anticipated pressures on the China module market in the second half of the year.
The report also suggests negative implications for Fluence Energy (NASDAQ:FLNC), as Canadian Solar’s storage backlog indicates an ASP of approximately $133 per kilowatt-hour (KWh), which contrasts with Fluence Energy’s recent bookings at around $181 per KWh. This disparity points to a challenging pricing environment within the energy storage sector. According to InvestingPro analysis, Fluence Energy, currently valued at $962 million, is showing signs of being oversold, with the stock trading significantly below its 52-week high of $26.12. Subscribers to InvestingPro can access 20+ additional investment tips and comprehensive financial metrics for FLNC, along with detailed Pro Research Reports that provide actionable insights for informed investment decisions.
In other recent news, Fluence Energy has faced a series of updates impacting its financial outlook and analyst ratings. The company reported a miss in its first-quarter financials, prompting Jefferies to revise its price target from $15.00 to $7.00, citing concerns over a competitive landscape and reduced growth outlook. Similarly, Canaccord Genuity lowered its price target from $34.00 to $14.00 following a reduction in Fluence Energy’s fiscal year 2025 financial guidance, although the firm maintained its Buy rating. BofA Securities also downgraded Fluence Energy from Buy to Neutral, adjusting the price target to $8.00 due to execution risks and increased competition, leading to a 15% cut in fiscal year 2025 revenue guidance.
On a more positive note, Truist Securities reaffirmed its Buy rating with a $7.00 price target, highlighting a significant agreement between Fluence and Cordelio Power for over 1.0GWh of Battery Energy Storage System equipment. This agreement is expected to support Cordelio’s development pipeline, with projects beginning in 2026 and 2027. Mizuho (NYSE:MFG) initiated coverage with an Outperform rating and an $8.00 price target, emphasizing Fluence’s strong market position and potential sales growth. The firm pointed to Fluence’s domestic sourcing advantage and the growing demand for battery storage as factors that could drive future performance. These recent developments indicate a complex landscape for Fluence Energy, with varying analyst perspectives reflecting both challenges and opportunities in the energy storage market.
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