Roth Capital Upgrades PowerSecure To A Buy Following Release 2Q14 Results
In a research note published yesterday, Roth Capital analyst Matt Koranda upgraded PowerSecure International (POWR) from a Neutral to a Buy and raised the price target on shares to $14 (from $10), following the company’s strong quarterly results.
Koranda wrote, “We believe management has fixed the primary issues that caused POWR to under-perform in Q1 (UI: POWR renegotiated a large, unprofitable UI contract and increased utilization of its equipment and crews; DG: POWR is refocusing its sales force on smaller, faster turn DG projects); (2) we forecast resumed growth across POWR’s three business segments in 2015 and a narrowing of EPS losses driven by recent contract wins; and (3) we believe the company is undervalued based on our sum-of-the-parts analysis”.
Koranda added, “We increase our 2014 revenue forecast to $246mn (vs. prior consensus of $245mn and prior ROTHe of $244mn) and boost GMs to 24.1% (vs. prior consensus of 23.0% and prior ROTHe of 23.1%). We touch down opex, which results in our 2014 EPS estimate of -38c (vs. prior consensus of -41c and prior ROTHe of —56c). We note GM compression in 2015, which is driven by the large solar EPC contract that we expect POWR to recognize during the year. Management expects this contract to compress GMs but to add to EPS given the low opex associated with these projects”.
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