Brean Murray has initiated coverage on four green stocks this morning. American Superconductor (AMSC) and EnerNOC (ENOC) get Buy ratings from the firm while Echelon (ELON) and Comverge (COMV) get Hold ratings.
Hat tip to StreetInsider.com for the following analyst comments:
“Buoyed by an experienced management team and strong wind energy market growth in China, AMSC’s revenues grew from $52 million in FY06 to $183 million in FY08. With a continuation of the current wave of global (primarily China) wind energy growth expected, and federal subsidies and tax credit incentives recently authorized to encourage a new wave of growth from smart grid implementation, we expect a continuation of rapid growth for AMSC into FY09 and beyond…We value smart grid stocks through a combination of techniques, including relative (Total Enterprise Value-to-Revenues, Total Enterprise Value-to-EBITDA, Relative Price-to-Earnings and Relative Price-to-Book Value) and absolute (Discounted Cash Flow) measures. Based on the average of these comparative and absolute valuation methods our fair value price is $37 per share. Given our fair value estimate, we believe AMSC shares are attractively valued at current prices.”
AMSC is trading up over 3% and continues to look quite bullish on the daily chart.
EnerNOC has seen rapid growth in recent years, with revenues growing from $10 million in FY05 to $106 million in FY08. With federal subsidies and tax credit incentives recently authorized to further encourage smart grid implementation, Brean Murray expects a continuation of rapid growth for ENOC into 2009 and beyond. Given the positive longer-term macro bias for development of the smart grid sector, we would consider the recent pullback in ENOC shares as an opportunity for investors to establish or add to existing positions.
ENOC is trading down over 3% today and looking a bit tired after its torrid run in the past year.
Recently, Echelon has witnessed a slowdown in its core product sales given the economic downturn and more cautious capital spending plans by utilities. Notwithstanding positive momentum from the U.S. stimulus package incentivizing smart grid implementation and a substantial new contract with Duke Energy, Brean projects negative earnings into FY10, with potential profitability in FY11.
ELON is up over 2% today and continues to look extremely bullish on the daily chart.
It says Comverge is emerging as a leader in providing demand response (DR) systems for residential, commercial and industrial customers. As an early-stage entrant in an emerging sector, Comverge has had fast revenue growth in recent years tied to increasing acceptance of its product offerings and growing governmental support for the clean energy sector. Still, manufacturing and operating costs continue to expand at an even faster rate, pressuring gross margins and limiting profitability over the near term.
COMV is trading flat today