Wedbush Morgan initiated coverage on EnerNOC (ENOC) this morning with a Neutral rating and price target of $25.  Hat tip to Street Insider for the analyst comment.

“Demand response is undergoing rapid market evolution, with significant changes to contract and auction procedures, which could both positively and negatively impact the outlook. Slow traction in EnerNOC’s energy management business after allocation of significant resources raises valid questions about the company’s ability to serve this market, or shift business strategy to serve next generation demand response.”

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Wedbush also thinks that continued acquisitions show that the company may be lacking focus. The last 8 companies acquired, for $30 million, provided limited revenue traction.  Their price target is a 25x FY11 EPS estimate multiple. They sees falling PJM prices in FY11, offset by a favorable revenue split with C&I customers.

Risks include: the potential for weak pricing in future capacity auctions, competition from alternative sources of demand response, new technology, and the potential for margin compression. They think that the long sales cycle and legislative risks could also impact EnerNOC.

Shares of EnerNOC (ENOC) recovered a bit today after reversing sharply following earnings and getting hit again on Friday’s overall weakness.  Technically, the stock looks a bit sick after the post earnings reversal and I’d stay away.  It’s a pricey stock with lots of optimism built in.