Clean Diesel (CDTI) Surpassed the $1.00 Mark; Roth Capital Sees the Stock at $0.85 – Here’s Why


Emission control system maker Clean Diesel (NASDAQ:CDTI) is a puzzle. Today, CDTI shares jumped as much as 129% to $1.42, before trimming back some gains to trade up about 80%. Why? Your guess is as good as anybody else’s. There hasn’t been a word’s worth of news coming out of Clean Diesel since its last earnings report.

Roth Capital analyst Matt Koranda recently slashed his price target on CDTI to $0.85 (from $1.40), while maintaining a Neutral rating on the stock. His price target implies about 20% downside from current levels.

Koranda wrote, “CDTI showed several encouraging data points on its Technology and Advanced Materials pipeline. However, withheld 2018 powder guidance and sustained absorption issues around Honda cause us to cut our 2018 margin outlook. With the re-positioning of the company into a powder provider now largely complete, we await better visibility into the TAM revenue ramp and an improved cash position before becoming more constructive.”

“Given the softness in Q4’17 TAM revenue, and withheld 2018 guidance for this revenue stream, we lower our 2018 TAM revenue to $2.5mn vs. prior ROTHe of $4.1mn. The net effect of these two changes essentially cancels out and our overall revenue estimate remains virtually unchanged at $11.8mn. We note management expects to provide additional information on the TAM revenue outlook for 2018 around the Q1 results call, which suggests certain binary decision points impending for a portion of the pipeline. We lower our 2018 GM estimate to 25.8% (vs. prior ROTHe of 38.5%), which is inline with guidance of 20-30%, to reflect the slower-than-expected ramp of TAM revenue as well as fixed cost absorption headwinds related to the Honda business in H1’18,” the analyst continued.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matt Koranda has a yearly average return of 1.4% and a 46% success rate. Koranda has a -23.3% average return when recommending CDTI, and is ranked #2361 out of 4801 analysts.

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