Goldman Sachs Starts Westport Innovations (WPRT) at Sell; Overvalued Earnings Power

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Goldman Sachs initiates coverage on Westport Innovations (NASDAQ: WPRT) with a Sell rating and $21 price target, suggesting 16% downside.

While the firm is optimistic on the natural gas engine penetration opportunity of the company, they sees downside from here due to: (1) the Cummins JV that accounts for nearly all of WPRT medium-term profits is scheduled to terminate in 2021, with a buyout option at 1.3x EBIT in 2019, (2) high distribution support requirements limit normalized profitability for the Heavy Duty franchise in the absence of a sizeable new agreement, and (3) although WPRT’s technology provides best in class performance, low cost alternatives are competitive and available.

For an analyst ratings summary and ratings history on Westport Innovations click here. For more ratings news on Westport Innovations click here.

Shares of Westport Innovations closed at $25.09 yesterday, with a 52 week range of $21.93-$50.19.

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