Analysts slash Canadian Solar price targets

(Reuters) - At least two brokerages slashed their price targets on Chinese solar-cell maker Canadian Solar (CSIQ.O), a day after it received a subpoena from U.S. regulators seeking documents relating to some sales in 2009.

Shares of the company were down as much as 19 percent at $9.73 in pre-market trade Wednesday on Nasdaq. The stock is now down over 70 percent from a January year-high.

"To us, the SEC subpoena, and pending revision to fourth-quarter revenue, both appear to center on sales in the fourth quarter to customers who returned modules in the first quarter," Oppenheimer analyst Gary Hsueh said.

"Our key concern is: what instigated the returns? In a tight demand environment, this rates as paranormal activity."

The company, which delayed its first quarter results, added that it may revise its fourth quarter and full-year results as it now intends to recognize sales only after receiving full cash payments from certain customers.

Canadian Solar, which was founded in Ontario, Canada, but has manufacturing operations in China, said it will cooperate with the Securities and Exchange Commission inquiry.

"The more questions, the more convinced we are that several overhangs will likely dog Canadian Solar for some time," Hsueh, who slashed his price target on the company's stock from $19 to $10, said.

Barclays Capital analyst Vishal Shah, meanwhile, halved his price target on the company's stock to $11.

"We expect shares to remain under pressure until the SEC investigation is concluded and also expect ongoing execution concerns to limit near-term earnings per share upside," Shah wrote in a note to clients.

'MORE PARANORMAL ACTIVITY'

Canadian Solar also said its estimated first-quarter shipments came in below its April forecast, and guided toward sequentially lower second-quarter shipments.

The company's relatively weak forecast came even as other makers of photovoltaic solar equipment saw demand surge as the market rebounded from a weak 2009.

Oppenheimer's Hsueh said Canadian Solar's second-quarter shipment view was "more evidence of paranormal activity."

"(This) is in sharp contrast to recent checks in Asia suggestive of 10 percent to 15 percent of quarter-over-quarter megawatt growth."

While the company upped its full-year shipments view, both Hsueh and Shah cut their profit estimates for the period.

Hsueh slashed his estimates by 66 cents a share to 85 cents a share, while Shah now expects full-year earnings of 80 cents a share, from a prior estimate of $1.20 a share.

(Reporting by Adveith Nair in Bangalore; Editing by Vyas Mohan)