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Thursday, February 28, 2008
EnerNOC (NASDAQ:ENOC): Actionable Trading Call!
EnerNOC (NASDAQ:ENOC) got killed yesterday following weaker than expected results and there may be some more downside eary on as Jeffco is out downgrading their rating to Hold from Buy this morning (tgt goes to $18 from $54). Yet, we have some interesting defenses out as well, which indicate the stock may be a bounce candidate:
- JMP Securities is maintaining their Market Outperform rating while decreasing their price target from $50 to $35. EnerNOC's stock took at 36% haircut yesterday and is now down 67% year to date. While all metrics during the quarter pointed in the right direction -- higher than expected MW under management in 4Q07, above average MW additions QTD, and higher gross margins -- the company took a beating from investors. Higher than expected operating costs drove EPS lower than analysts' expectations, resulting in a miss. In addition, management's comments indicating that they plan to grow the engineering bench by 40-50% by the end of the year added more fuel to the fire. Lastly, management's comments indicating that the average price per MW could be down slightly in 2008
probably helped send investors running.
They see this as a unique buying opportunity noting that with the demand response market growing rapidly and average 5-year contract ROIs north of 20% in EnerNOC's business, they believe management's objective to rapidly expand sales while incurring higher upfront costs is warranted.
- Morgan Stanley while maintaining their Underweight rating on the stock notes that no matter how the long-term model plays out, they believe there could be a good trading opportunity around the strong summer season. Firm expects ENOC to report strong results starting in June of each year due to additional capacity ramping in the PJM territory and increased energy payments from outages. If they are correct, we could see slightly stronger results in Q2 (from a one month increase in June) and significantly stronger results in Q3. Believes this strong seasonality could provide a good trading opportunity if the market reacts to these positive Q/Q trends.
Notablecalls: The stock is way down from around $50 in just 2 months. It's going to bounce today.
Actionable Trading Call!
- JMP Securities is maintaining their Market Outperform rating while decreasing their price target from $50 to $35. EnerNOC's stock took at 36% haircut yesterday and is now down 67% year to date. While all metrics during the quarter pointed in the right direction -- higher than expected MW under management in 4Q07, above average MW additions QTD, and higher gross margins -- the company took a beating from investors. Higher than expected operating costs drove EPS lower than analysts' expectations, resulting in a miss. In addition, management's comments indicating that they plan to grow the engineering bench by 40-50% by the end of the year added more fuel to the fire. Lastly, management's comments indicating that the average price per MW could be down slightly in 2008
probably helped send investors running.
They see this as a unique buying opportunity noting that with the demand response market growing rapidly and average 5-year contract ROIs north of 20% in EnerNOC's business, they believe management's objective to rapidly expand sales while incurring higher upfront costs is warranted.
- Morgan Stanley while maintaining their Underweight rating on the stock notes that no matter how the long-term model plays out, they believe there could be a good trading opportunity around the strong summer season. Firm expects ENOC to report strong results starting in June of each year due to additional capacity ramping in the PJM territory and increased energy payments from outages. If they are correct, we could see slightly stronger results in Q2 (from a one month increase in June) and significantly stronger results in Q3. Believes this strong seasonality could provide a good trading opportunity if the market reacts to these positive Q/Q trends.
Notablecalls: The stock is way down from around $50 in just 2 months. It's going to bounce today.
Actionable Trading Call!
posted by notablecalls # 9:15 AM 
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