Canaccord Genuity Smart Grid December Quarter Preview: 2012 Expectations Relatively Tempered
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Canaccord Genuity Smart Grid December Quarter Preview
Analyst, John Quealy, said, "Fresh off our findings from DistribuTECH, we find 2012 expectations relatively tempered for the sector as a whole. Our current outlook suggests that 2012 will represent somewhat of an industry trough, as near term, relatively modest domestic break-and-fix order flow trends yield to the European AMI upgrade cycle kick-off in the ‘13+ timeframe (mid-decade delivery schedule). Obviously, we find investors focused on ’12 guidance; here we find risk elevated for some of the smaller, more concentrated (geography and/or customer) companies within our coverage universe. We anticipate that some of the industry’s larger, more diversified hardware manufacturers will provide the Street with a more resilient outlook."
Echelon Corp (Nasdaq: ELON)(HOLD): We expect compares to grow more challenging moving through ’12 as volumes at Duke (33% of segment revs in Q3/11) begin to moderate, while run-rate volumes at Fortum should help near term.
Elster Group (NYSE: ELT)(BUY): Management changes are being implemented, while recently announced restructuring initiatives should help improve operating leverage ahead of European AMI [advanced metering infrastructure] volumes in ‘13+. By segment, we expect gas to remain the clear outperformer, while water continues to face notable headwinds.
EnerNOC (Nasdaq: ENOC)(BUY): We expect shares to remain volatile near term as questions surrounding ’12 guidance remain ahead of the Q4 call. Additionally, February 15 remains a key date as that is the deadline by which FERC [Federal Energy Regulatory Commission] is expected to revisit PJM demand response compensation issues.
ESCO Technologies (NYSE: ESE)(HOLD): We expect investor focus to center on the ramp of meter volumes at SoCal Gas (currently slated for the calendar Q4/12 – Q1/13 timeframe) as F2012 appears largely transitional in nature.
Itron (Nasdaq: ITRI)(BUY): While the Street likely focuses on formal 2012 guidance (along with ’13 Street expectations) and European exposure, we look for a relatively resilient gas and water biz and run rate BC Hydro AMI volumes to help partially offset a ~$300M OpenWay headwind this year.
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Analyst, John Quealy, said, "Fresh off our findings from DistribuTECH, we find 2012 expectations relatively tempered for the sector as a whole. Our current outlook suggests that 2012 will represent somewhat of an industry trough, as near term, relatively modest domestic break-and-fix order flow trends yield to the European AMI upgrade cycle kick-off in the ‘13+ timeframe (mid-decade delivery schedule). Obviously, we find investors focused on ’12 guidance; here we find risk elevated for some of the smaller, more concentrated (geography and/or customer) companies within our coverage universe. We anticipate that some of the industry’s larger, more diversified hardware manufacturers will provide the Street with a more resilient outlook."
Echelon Corp (Nasdaq: ELON)(HOLD): We expect compares to grow more challenging moving through ’12 as volumes at Duke (33% of segment revs in Q3/11) begin to moderate, while run-rate volumes at Fortum should help near term.
Elster Group (NYSE: ELT)(BUY): Management changes are being implemented, while recently announced restructuring initiatives should help improve operating leverage ahead of European AMI [advanced metering infrastructure] volumes in ‘13+. By segment, we expect gas to remain the clear outperformer, while water continues to face notable headwinds.
EnerNOC (Nasdaq: ENOC)(BUY): We expect shares to remain volatile near term as questions surrounding ’12 guidance remain ahead of the Q4 call. Additionally, February 15 remains a key date as that is the deadline by which FERC [Federal Energy Regulatory Commission] is expected to revisit PJM demand response compensation issues.
ESCO Technologies (NYSE: ESE)(HOLD): We expect investor focus to center on the ramp of meter volumes at SoCal Gas (currently slated for the calendar Q4/12 – Q1/13 timeframe) as F2012 appears largely transitional in nature.
Itron (Nasdaq: ITRI)(BUY): While the Street likely focuses on formal 2012 guidance (along with ’13 Street expectations) and European exposure, we look for a relatively resilient gas and water biz and run rate BC Hydro AMI volumes to help partially offset a ~$300M OpenWay headwind this year.
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