Westport Fuel Systems Inc. (WPRT-T; WPRT-Q) stock continues to climb amid a bullish outlook for renewable and clean energy alternatives, particularly as the climate-friendly Joe Biden administration readies to take office in the United States.
Shares of the Vancouver-based company, which makes alternative fuel systems and components, were up about 19 per cent to $9.40 in Wednesday trading on the Toronto Stock Exchange, their highest level since 2014. On the Nasdaq, the shares hit a high of US$7.39, up about 18.5 per cent, on the day.
The stock is up by about 35 per cent over the past five days, 70 per cent over the past month and 230 per cent over the past three months.
Craig-Hallum Capital Group analyst Eric Stine increased his target price on the stock on Wednesday to US$12 from US$7 and maintained a “buy” rating.
“Westport Fuel Systems enters 2021 poised for a meaningful rebound in its business and set to take additional steps to solidify its market leadership as the transportation market decarbonizes,” Mr. Stine said in a Jan. 13 note.
He said the company’s third-quarter results, released in November, “illustrated the positive underlying fundamentals across its business in light-duty, medium-duty, and heavy-duty applications.”
Westport — which supplies fuel systems for low-carbon fuels like natural gas, renewable gas propane and hydrogen to the global auto industry — reported third-quarter revenue of US$65.4-million, down 13 per cent year-over-year but well past expectations of $45.3-million. Net income was US$0.8 million or a penny US per share compared to net of US4.9-million or 4 cents US a year earlier. Analysts were expecting a loss of 4 cent US per share in the quarter ended Sept. 30.
“There is a strong market tailwind in place from a regulatory standpoint and increased corporate sustainability commitment and it has a solid balance sheet in place having successfully navigated the severe impact of COVID-19,” Mr. Stine wrote in the Jan. 13 note.
He also said the company’s proprietary high-pressure direct injection (HPDI) engine technology is seeing “substantial growth in Europe which should only accelerate with its entry into China a potential near-term event.”
He said hydrogen, along with natural gas and propane, is becoming a more attractive fuel for the future and believes Westport “will be a major participant when the use of hydrogen takes hold.”
Mr. Stine said he hiked his target price, believing Westport deserves a higher multiple.
Among the five analysts that cover the stock, three have a “buy” and two a “hold,” according to Marketwatch. The average price target, before Mr. Stine’s upgrade on Wednesday, was $5.18, based on the Nasdaq price.
Analysts are expecting the company to report fourth-quarter revenue of US$69.2-million and zero cents per share compared to revenue of US$74.3-million and zero cents per share a year earlier.
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