Raymond James Picks This Stock as Best Contrarian, Beaten-Down Clean Tech Idea for 2022

Raymond James analyst Pavel Molchanov reiterated a Strong Buy rating on Itron (NASDAQ: ITRI) stock and believes it can outperform in 2022 after struggling to meet expectations this year.

Molchanov believes that 2021 has been a year of price consolidation for the cleantech benchmark index.

“Power grid modernization — a facet of both climate mitigation and adaptation — is a theme to which Itron is uniquely leveraged among U.S.-listed companies. Many of the “crowded trades” under the umbrella of energy transition in the electric power sector — distributed generation, power storage, electric vehicles — require a grid that is more intelligent and digitized. To be clear, Itron itself is very far from a crowded trade: after the supply chain issues that hit the stock in August, erasing its earlier outperformance for the year, this is quite a contrarian idea,” Molchanov said in a client note.

Given that supply chain issues invited downside pressure on ITRI stock, the supply chain headwinds of 2021 are now starting to dissipate, according to the analyst. Hence, we may witness a back-end-weighted revenue recovery in 2022.

“With investors having punished the stock for the supply chain issues, here are some things that the market is overlooking. Itron's high-margin, software-focused Outcomes segment reached 12% of the revenue mix in 2021, up from 9% three years ago — this growth being entirely organic — and is set to increase further from here,” the analyst added.

Itron stock price is down 30% YTD.

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