Trina Solar's Worsening Outlook; Deutsche Bank Downgrades To Hold

Deutsche Bank's Vishal Shah has downgraded Trina Solar Limited (ADR) (NYSE: TSL) to Hold and lowered his price target from $11.00 to $9.00.

Shah said Trina Solar is "executing well in a robust demand environment in the US and China. However, with outlook for H2 China market worsening, we expect increased pricing pressure to continue to impact 2H margins."

The company's shipments outlook is extremely zealous. Trina Solar is assuming sequential growth in 2H, which requires China's demand remains flat and demand in non-Chinese markets to increase from 20 percent to 45 percent. In Shah's eyes, however, this seems too "aggressive."

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China takes up "roughly 35 percent of [the] overall mix" of Trina Solar's FY shipments, Shah noted. Management expects U.S. shipments to grow sequentially, but become a smaller percentage in Q2. The analyst believes U.S. shipments to grow 20 percent in 2H. The U.S. market, which carries a lower margin and volume growth, will act as a margin headwind for Trina Solar, Shah concluded.

Trina Solar Limited closed at $8.72 on Thursday and was trading down 3.04 percent in Friday's pre-market session.