Canadian Solar Soars on Recurrent Energy Acquisition Plan - Analyst Blog

Shares of Canadian Solar Inc. ( CSIQ ) skyrocketed yesterday on the news of its intended acquisition of Recurrent Energy, LLC, a leading North American solar energy developer. This transaction is expected to significantly expand the scale of its solar energy development platform making it one of the foremost solar energy developers in the world. Canadian Solar's shares soared 25.2% on Feb 3 to close at $26.69.

Per a definitive agreement, Canadian Solar has plans to acquire Recurrent Energy from Sharp Corporation for $265 million. The transaction is slated to close in the first quarter of 2015, subject to customary closing conditions and regulatory approvals.

Following the transaction, Canadian Solar's total solar project pipeline will increase to 8.5 gigawatt ("GW") from 4 GW while its late-stage project pipeline will be boosted by 1 GW to 2.4 GW. Canadian Solar stated that the acquisition will create an estimated revenue opportunity of at least $2.3 billion under a build-and-sell business model.

California and Texas-based Recurrent Energy's 1 GW late-stage pipeline is considered as one of the largest utility-scale project portfolios slated to be built prior to the investment tax credit expiration in 2016. Founded in 2006, Recurrent Energy has developed and sold more than 520 megawatt ("MW") of solar projects.

The transaction will further accelerate Canadian Solar's hold in the business of ownership and development of solar power plants in North America.

Solar demand is rising on a global scale. Apart from strengthening its footprint in North America, Canadian Solar continues to expand its operations in China, Brazil, Japan and other emerging solar markets. These initiatives are helping the company to diversify its revenue stream.

Although it faces intense competition from U.S-based solar majors like First Solar, Inc. ( FSLR ), SolarCity Corp. ( SCTY ) and SunPower Corp. ( SPWR ), Canadian Solar stands to gain immensely from its geographical diversity.

This Zacks Rank #1 (Strong Buy) company has been posting strong results for the past several quarters. It reported positive earnings surprises in three out of the last four quarters, delivering an average beat of 20.53%. With the boom in the solar markets worldwide, Canadian Solar will likely witness substantial top- and bottom-line growth in the coming quarters.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CANADIAN SOLAR (CSIQ): Free Stock Analysis Report

FIRST SOLAR INC (FSLR): Free Stock Analysis Report

SOLARCITY CORP (SCTY): Free Stock Analysis Report

SUNPOWER CORP-A (SPWR): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics