Think Equity’s Woodburn Maintains Westport (Nasdaq:WPRT) at BUY – Loweres Revenue Forecast
Source: http://feedproxy.google.com/~r/smallcappulse/feed/~3/VqC5mjtOipI/Posted on Wednesday, November 4th, 2009 | In Investing Lessons, Small & Micro Cap
November 4, 2009 -nbsp; Analyst Comments -nbsp; Think Equityrsquo;s David Woodburn weighed in on Westport Innovations (Nasdaq:WPRT) this morning stating that he is lowering his revenue forecast based on a reduction of estimates for heavy-duty engine volume based on near-term economic pressures on fleet purchases. He continues to rate the stock at a BUY
Key Takeaways
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Decreasing overall engine forecasts for F2010 and F2011; shifting some volume from higher-profit heavy-duty line to Cummins-Westport medium-duty line
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; FQ2 should be a non-event ndash; expects revenue and EPS of C$27.7 million and (C$0.30)
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; ldquo;Skepticalrdquo; on odds of incentive-heavy NAT GAS legislation being passed (as written) by itself, though the odds have increased lately
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Federal incentives to look for which could drive uptake of CNG and LNG vehicles include the DOE/Clean Cities alt fuel grants, and the NATGAS bill.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Nov. 6 could bring the approval of SCAQMD/CARB/Port Funding
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Valuation – ldquo;From a comparable company perspective, we track Westport’s valuation relative to similar clean energy growth companies. As many of these companies have yet to turn profitable (like Westport), we find the most-useful basis of comparison to be an Economic Value to Revenue (EV/Revenue) ratio. To be fair, with Westport, we use what we call “owned revenue,” or Westport’s share of revenue net of its joint venture with Cummins. We assign a multiple of 1.3x to our F2012 “owned” revenue estimate of C$266 million, with the result being a fair value of US$12/share. The 1.3x multiple matches the 1.3x average of a group of alternative energy technology companies, with the range being 0.8x to 3.5x, and is the same as the 1.2x average of engine/truck manufacturers.rdquo;
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