CIBC World Markets Inc. raised price target on shares of Westport Innovations Inc. (NASDAQ:WPRT) to $35 from $18.50 after its preliminary fourth quarter results. The brokerage maintained its "Sector Underperformer" rating on shares of Westport.
Westport, which provides engine and fuel system technologies, announced preliminary fourth quarter and 2012 sales and earnings guidance. For fourth quarter of 2011, Westport expects sales to be about $96 million to $100 million, above previous guidance of about $76 million to $86 million. 2012 sales guidance is $400 million to $425 million.
Fourth quarter FD EPS guidance is for a loss of about $0.30 to $0.32, significantly below CIBC loss estimate of $0.10 and consensus loss estimate of $0.20 (loss of $0.11 to $0.27). Westport also announced a 5.0 million common share issue.
While 50% sales growth is impressive in any one year, Westport will need to maintain this growth rate into 2018/2019 to justify the company's current valuation. This sales growth rate would require saturation of Cummins' medium & heavy duty engine business.
"We are increasing our 2012 revenue estimate to $425 million from $375.5 million and increasing our PT as our sales growth CAGR increases to about 40% from about 30%. However, given a wide range of potential outcomes, valuation expectations will remain wide over the next few years," CIBC wrote in a note.
The brokerage narrowed its 2012 loss per share estimate for Westport to $0.45 from $0.50.
WPRT is trading down 3.26 percent at $44.17. The stock has been trading between $16.19 and $47.38 for the past 52 weeks.