In conjunction with our sector note, we are
upgrading shares to 1-OW, raising our price target
to $30, representing ~34% upside from current
levels. Although we had recently highlighted a
positive risk-reward trade for Trina going into
earnings (see 6/28 note "Raising Estimates, Price
Target" for more details), our 2-EW rating was
predicated on uncertainty with respect to 2011
demand outlook. Shares are down 17% ytd vs 2%
S&P decline, and have generally lagged
performance of stocks in the sector, mostly due to
concerns over 2011 outlook, in our view. Our
recent industry checks indicate that 2011 demand
outlook is improving and we now see significant
upside to consensus 2010/2011 estimates as well
as valuation. Earnings call on 8/24 (where we
expect mgmt to beat/raise guide) could act as the
next potential catalyst for shares.
Summary
What's changed: We are raising 2010 EPS from
$2.25 to $2.75. Our new 2010 ests assume
890MW shipments and flat/2% q/q ASP decline in
Q3/Q4. We are raising our 2011 EPS from $2.45
to $3.25. Our new 2011 ests assume 50%
shipment growth and $1.45/W ASPs exiting '11.
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