MLV Reiterates Buy On Quantum Fuel Following 3Q14 Results


MLV analyst Carter Driscoll reiterated a Buy rating on Quantum Fuel (NASDAQ:QTWW) with a $5.50 price target, following the company’s third quarter results, posting revenues of $6.6M and EPS of ($0.22) that missed MLV’s expectations.

Driscoll wrote, “Revenues and EPS missed our expectations due primarily to two factors. First, orders from former #1 customer Agility Fuel Systems – with which QTWW now competes directly – are rolling off, with revenue contribution down 70% q/q to < $1M; we expected orders would end by YE14 but at a more measured pace. Second, QTWW is rapidly building out its supply chain to support fuel system sales, which caused some higher period costs including expedited freight, higher material costs and factory start-up costs. We expect these costs to normalize over the next 2-3 quarters. On a positive note, QTWW shipped ~120 fuel systems and has a healthy backlog of ~600 systems. QTWW also announced a new development program for an auto hydrogen alliance and has begun to ship product to support GM’s (GM-NR) Chevrolet Impala bi-fuel (CNG & gasoline) vehicle that just entered production, which is targeted at fleets. So while 3Q results were disappointing, we always expected the transition from CNG storage tank provider to full systems would take several quarters to achieve.”

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 7.5% and a 54.5% success rate. Driscoll has a 41.3% average return when recommending QTWW, and is ranked #1398 out of 3364 analysts.

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