Roth Starts Active Power (ACPW) at Buy; Refocused Company Should See N-T Gains

Roth Capital assumes Active Power Inc. (Nasdaq: ACPW) at Buy and price target of $5.

Analyst Philip Shen sees ACPW re-establishing its growth trajectory in 2014 and accelerate growth in 2015 following a lackluster 2013. Key points of the analyst's thesis:

1. New management is revamping ACPW’s sales force, which we believe will start to improve sales performance by 2015. Management recently estimated that these restructuring efforts are ~70% complete, and believes the refocused sales personnel should begin to drive bookings growth during H2’14, the analyst said;
   
   
2. We see opportunities to boost revenues with longtime strategic customers Caterpillar (NYSE: CAT) and H-P (NYSE: HPQ);
   
   
3. We believe ACPW’s UPS segment is reaching an inflection point as the company’s recently-introduced HD 750 product is now at cost parity with battery UPS systems. In our view, offering this larger scale product at cost parity, or even a modest discount vs. competitors, could make the selling process easier, speeding up the TCO sales cycle; and
   
   
4. ACPW is leveraged to attractive end markets with compelling demand fundamentals.

Shares of ACPW are going for 0.7 times FY15 revenue expectations, while peers in the clean energy growth category average 1.7 times. Shen believes that the stock is at an attractive entry point.

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