'One of the Most Significant Events for Natural Gas in Years' - Westport Fuel Systems (WPRT) Skyrockets After Amazon (AMZN) Orders 700+ Trucks Powered by Natural Gas

February 8, 2021 9:26 AM EST
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Westport Fuel Systems (NASDAQ: WPRT) stock is up more than 40% in pre-open Friday after Reuters reported on Friday that the e-commerce giant Amazon (NASDAQ: AMZN) ordered hundreds of trucks that run on compressed natural gas.

Accordingly, Amazon is exploring options that involve less air pollution as it tries to eliminate heavier-duty trucks that emit higher levels of greenhouse gases. The company ordered more than 700 compressed natural gas class 6 and class 8 trucks so far.

“Amazon is excited about introducing new sustainable solutions for freight transportation and is working on testing a number of new vehicle types including electric, CNG, and others,” the company said in a statement.

The latest move by Amazon comes after the company pledged to run a carbon-neutral business by 2040. To this end, it ordered 100,000 electric vans from startup Rivian in 2019.

Wall Street analysts see this move as “one of the most significant events for natural gas for transportation in many years,” according to Eric Stine, an analyst at Craig-Hallum Capital Group.

“For the industry, we think this is significant in that it (1) shows sustainability is top of mind and mission-critical for corporate fleets, (2) illustrates the value of natural gas, especially when paired with RNG resulting in emissions lower than electric, and (3) provides the definitive indication that natural gas is the ideal choice for heavy-duty (HD) trucks rather than battery electric (lots of hype but we don’t think has a place in HD applications) and fuel cells (at best years away from being viable).

“For Westport Fuel Systems, this order will be solidly additive to EBITDA, we think shows the importance and increased value of CWI’s IP which is jointly owned by WPRT, and we think is an additional consideration towards the potential extension of the CWI JV beyond 2021,” Stine wrote in today’s note.

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