Piper Jaffray Upgrades Echelon (ELON): "Duke Contract Raised Company Profile"

Piper Jaffray is upgrading Echelon (ELON) this morning following the big Duke Energy (DUK) contract announced yesterday.  The firm is upgrading the company from Underweight to Neutral and is raising the price target from $6 to $10.

Hat tip to StreetInsider.com for the following analyst comment:

Piper analyst says, “Echelon announced a framework agreement with Duke Energy (NYSE: DUK) that includes an initial order for 120,000 smart meters and data concentrators and Ohio; the contract is estimated to be worth $15.8M (or ~$132 per endpoint). The company believes it will receive follow-on orders for the balance of the deployment. Echelon values the two deployments combined at ~$150M+ or ~$107 per endpoint. Based on our estimates of capex costs for other smart meter vendors, we believe this represents a lower cost solution that offers the same features and functionality, if not more. Other solutions we are monitoring charge $150-200 per endpoint for essentially the same offerings. We believe the Duke contract win will significantly raise ELON’s profile in North America as well as the value proposition of powerline communications solutions, increasing their chances for additional smart meter deployment wins. We believe we could see additional contract wins after stimulus awards are announced in October but the visible opportunities are priced into the stock. We upgrade to Neutral and raise our F09 estimates to ($0.88)/$94M from ($0.96)/$86M and our F10 estimates to ($0.40)/$143M from ($0.75)/$109M.”

Leave a Reply

Your email address will not be published. Required fields are marked *