EnerNOC (ENOC) Shares Sink Following FERC Compliance Filing from PJM; Analysts Weigh In

January 6, 2012 9:24 AM EST
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Price: $6.00 --0%

Rating Summary:
    5 Buy, 12 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 6 | Down: 3 | New: 2
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Shares of EnerNOC Inc. (Nasdaq: ENOC) are trading down over 13 percent in the pre-market hours Friday following a compliance filing at Federal Energy Regulator Commission from PJM.

PJM’s filing asks “Demand Response suppliers that have been Double Counting to notify PJM of the MW commitment they will be unable to meet at least 30 days before the next incremental auction.” The next incremental auction is scheduled to open on February 27, 2012.

Wedbush's Craig Irwin, who reiterated an Underperform rating and $6 price target on the stock this morning, noted ENOC has two options: 1. “to buy power in the incremental auctions and be reimbursed monthly for any losses on those purchases over the course of the relevant delivery year,” or 2. “demonstrate the company has unavoidable contractual obligations which will not be offset by the purchase of replacement capacity at incremental auctions and receive compensation for any losses should they prove this to PJM.”

KeyBanc's Carter Shoop, meanwhile, said “We believe the market will react cautiously to this news. While this is only a proposal, and the FERC needs to approve the measure, it shows that PJM is playing hard ball. ENOC bulls were hoping that PJM would go soft on DR providers in the 2012/2013-2014/2015 delivery years after winning the legal battle, allowing DR providers to use a 1.75-2x multiple of PLC.”

KeyBanc states ENOC’s margins and sales will be adversely affected if the FERC does accept PJM’s proposal.

Shoop maintains a Hold on EnerNOC.

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