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Canadian Solar Shares Plunge As Entire Solar Industry Feels The Burn

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Armina Ligaya, Financial Post

Shares of Canada’s largest solar panel maker slumped Monday as its prospects for profitability dimmed amid a supply glut that is casting a shadow over the entire industry.

Canadian Solar Inc.’s latest earnings also come as investors worry about the change in political climate under U.S. president-elect Donald Trump, who has signalled he has limited interest in alternative energy.

“In an era of uncertainty in the two biggest markets for solar, both in the U.S. and China, it can create a fundamental mismatch between supply and demand, which is what we’re going through right now,” said Cowen Group managing director and analyst Jeffrey Osborne.

Guelph-based Canadian Solar, the world’s second-largest solar panel manufacturer, reported revenues of US$657.3 million, below the consensus expectation of US$676.4, according to data compiled by Bloomberg. Earnings per share of $0.242 beat the $0.177 expected by analysts.

That, however, was due to the cost of panel components dropping faster than the price of their products, rather than being able to sell panels at higher prices, said Osborne.

Canadian Solar gave fourth-quarter guidance that said gross margins would be lower, between 11 per cent to 16 per cent, leaving investors spooked about its eroding profitability, said Osborne.

Shares of Canadian Solar were down nearly 9 per cent at US$10.68 on the NASDAQ on Monday.

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