MLV Cuts Westport Innovations Price Target Following Acquisition Of Prins Autogassystemen


MLV analyst Carter Driscoll reiterated a Hold rating on Westport Innovations (NASDAQ:WPRT) and reduced his price target to $6.00 (from $7.00), following the news that the company has acquired Prins Autogassystemen Holding B.V. for ~$15.1M in assumed liabilities (~$8.2M) and cash (~$6.9M). Prins offers a full suite of liquid propane gas (LPG), compressed (CNG) and liquefied natgas (LNG) components and subsystems aimed at light-duty through heavy-duty transportation markets.

Driscoll said, “We have raised our FY15E revenue and EPS to $179.4M and ($1.18) from $156.1M and ($1.27), respectively. However, in light of the severe correction in crude oil prices affecting diesel and gasoline prices, with which natgas competes as a vehicle fuel, we have lowered our terminal growth rate from 4.0% to 3.0% in our 5-year DCF. This results in a modest reduction in our PT to $6 from $7.”

The analyst continued, “At first glance we believe the acquisition makes sense and if the Prins’ JV takes off the deal may be even more attractive. However, in the near-term natgas adoption has been hampered by slower than expected adoption, in particular by truck fleets, and a weakening of the spread between diesel/gasoline and natgas.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Carter Driscoll has a total average return of -3.5% and a 28.6% success rate. Driscoll is ranked #2799 out of 3393 analysts.

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