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Piper Jaffray Downgrades Maxwell Technologies (MXWL) to Underweight; Valuation Call

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November 4, 2009 7:06 AM EST

Piper Jaffray downgrades Maxwell Technologies (Nasdaq: MXWL) to Underweight.

Piper analyst says, "We downgrade shares of MXWL to Underweight primarily on valuation and note the following key issues: 1) The company missed our and consensus EPS estimates for Q3, and we lower our estimates for C2010 and C2011 to be more in line with consensus (we were overly optimistic on the Wind and Hybrid opportunity). The company lowered its operating breakeven estimate for Q4 to exclude stock compensation (prior guidance did not exclude stock comp). 2) Although the company appears well positioned for the long-term thematic and secular opportunities in hybrid buses, we believe it is fully factored into our revised estimates and stock price near term. MXWL's initial Hybrid bus order should be completed by year end, and the company has not announced further hybrid bus backlog. We would review our rating should the Chinese hybrid bus opportunity more quickly emerge. We do anticipate some follow-on business but not greater than its initial win. 3) We believe the wind business that represented 50% of MXWL's ultra capacitor revenue in 2008 will be stagnant through 2010 and into 2011 given our outlook for continued financing and transmission constraints. The Enercon contract is set to expire in 2010. Its exposure to China though could offset some of the weakness in other wind markets. 4) The company was not a beneficiary of initial US stimulus funding as we had anticipated. The company has 12 proposals pending with partners and is optimistic it can access remaining stimulus funds."

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Maxwell Technologies, Inc. engages in the development, manufacture, and marketing of energy storage and power delivery products.