Roth Affirms Clean Diesel (CDTI) at 'Buy'; Sees L-T, Catalyst-Focused Strategy Playing Out

Roth Capital affirms its Buy rating and $3.75 price target on Clean Diesel Technologies, inc. (Nasdaq: CDTI) following Q4 reports. CDTi posted Q4 revs of $15.2 million and loss of $.24 per share, while Roth was at revs of $14.5 million and loss of just $.06 per share. Adjusted loss was $.11 per share.

Analyst Matt Koranda sees CDTi aggressively pursuing its catalyst-focused strategy. The analyst commented, Since announcing this strategy in Jul’13, the company has filed ~40 patents related to zero-PGM and ~6 patents related to advanced low-PGM technologies. Additionally, CDTi recently announced that it began producing catalysts for Honda’s MY’15 Acura TLX, which is expected to begin shipping during H1’14. While volumes for the TLX are relatively low (~1,500 TLX units sold in Feb’14 vs. ~24,600 Accord units), we view this as a nice win, as it adds to CDTi’s growing catalog of products with Honda (the 4/6-cylinder Accord, the hybrid/plug-in Accord, as well as the Acura TSX and RLX).

Koranda also said that OEM sales cycles are quite protracted, with an initial RFP taking over 12 months before any indication that a company has won a contract. The analyst continued, It can take another 1-2 years thereafter for a catalyst supplier to fully ramp production on that specific platform. We believe CDTi is actively pursuing additional shorter sales cycle opportunities in the off-road market. For conservatism, however, we hold off on modeling these sales.

For an analyst ratings summary and ratings history on Clean Diesel Technologies click here. For more ratings news on Clean Diesel Technologies click here.

Shares of Clean Diesel Technologies closed at $2.57 yesterday.

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