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Analyst Blog

On Nov 22, we issued an updated research report on Chinese solar development company – JA Solar Holdings Co., Ltd. (JASO - Free Report) . The company caters to a geographically diversified pan-continental customer base, covering Germany, Italy, the U.S., Spain, India, Korea, China and Japan.  Meanwhile, JA Solar faces cut-throat competition from domestic players.

Recently, JA Solar declared third-quarter 2016 adjusted earnings of 15 cents per share, beating the Zacks Consensus Estimate of 3 cents by a wide margin. Quarterly earnings, however, fell 77% year over year. Total revenue came in at $624.3 million, beating the Zacks Consensus Estimate of $586 million by 6.5%.

The company’s focus on expanding its geographical customer base has boosted international sales. During the third quarter, JA Solar witnessed strong demand in South America, which constituted 20.2% of the quarter’s total shipment. Shipments to North America rose to 13% of the total, from 1% in the year-ago quarter. Meanwhile, the company expects to ship 1.2–1.3 gigawatts (“GW”) of cells and modules in the fourth quarter of 2016, with essentially all being external shipments.

The company’s shift in focus to solar modules from cells is paying off. Module shipments in the third quarter were 1,200 MW, up 11.8% year over year. The figure represented 96.7% of the total shipment in the quarter.

On the flip side, the U.S. government’s recent efforts to promote its own solar industry have led the country to take strict action against the import of cost-competitive Chinese-manufactured solar modules. The anti-dumping policies imposed by the U.S. could dent JA Solar’s profits considerably. Moreover, despite the strong demand in Japan, the depreciation in the Japanese yen against RMB has affected JA Solar’s business to quite an extent.

Zacks Rank & Key Picks

JA Solar carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Sunrun Inc. (RUN - Free Report) , Vivint Solar, Inc. (VSLR - Free Report) and First Solar, Inc. (FSLR - Free Report) .

Sunrun has seen four upward estimate revisions for 2016 over the last 60 days. On an average, the company posted a positive earnings surprise of 134.71% in the trailing four quarters. Sunrun currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vivint Solar has seen three upward estimate revisions for 2016 over the last 60 days. On an average, the company posted a positive earnings surprise of 8.98% in the trailing four quarters. Vivint Solar holds a Zacks Rank #2 (Buy).

First Solar has seen six upward estimate revisions for 2016 over the last 60 days. On an average, the company posted a positive earnings surprise of 77.31% in the trailing four quarters. First Solar currently sports a Zacks Rank #3 (Hold).

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