UPDATE: Cowen Starts TCP International (TCPI) at Outperform
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Cowen initiated coverage on TCP International (NYSE: TCPI) with an Outperform rating and a price target of $18.00. Analyst Robert W Stone thinks a shift to LEDs will drive growth and margins.
"TCPI is a play on the penetration of energy efficient CFL and LED lighting. It designs and manufactures a wide range of products sold through major retail and C&I channels, including Home Depot and Wal-Mart. A mix shift to LEDs should drive growth and expand margins. Proceeds from the IPO support investment in automation and lower interest expense," he said.
"Government regulations are phasing out incandescent lights in key markets. CFL and LED combined should reach $87B WW in 2020 (McKinsey). LED bulbs are reaching compelling price points (<$8 for a 60W equivalent A type); and consumer adoption is aided by ENERGY STAR and other rebates. LED accounted for 25% of TCPI net sales in 2013 (vs. 4.3% in 2011), and should reach 37%, 48% and 53% in 2014-16E," he added.
Shares of TCP International closed at $10.85 yesterday.
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