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Westport Innovations (WPRT) Initiated as 'Buy' at Deutsche Bank; PT $38

 November 15, 2012 02:00 PM

(By Balachander) Westport Innovations Inc. (NASDAQ: WPRT) shares were initiated with a "buy" rating and price target of $38 by Deutsche Bank (DB).

"We see an inflection point for natural gas vehicles (NGVs) (and Westport shares) from 2013 as engine technology advancements (plus resulting new product introductions) increase the served available market opportunity and accelerate NGV penetration," the bank wrote.

"Diminishing infrastructure bottlenecks and a resulting increase in OEM interest in this technology should drive additional upside to our consensus estimates over the next 12-18 months," DB said.

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The bank believes shares are adequately discounting the near-term macro headwinds post the recent guidance revision and, considering the potential for multiple catalysts on the horizon, DB believe risk-reward is attractive at current levels.

"While shares have come under pressure due to negative revenue momentum over the past 24 months (‘12 rev est declined from $426M to $346M), we expect revenue momentum to turn positive as the macro headwinds diminish, new products gain traction and OEM contracts start contributing to revenue," the bank said.

DB said downside risks include: entry of new competitors, slower than expected government/consumer spending and margin compression from competitive pricing pressures.

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Canada-based Westport Innovations is a provider of engine and fuel system technologies utilizing gaseous fuels.

Shares shed 2.43 percent to trade at $25.73 on Thursday on the NASDAQ. The stock has been trading in the 52-week range of $21.93 to $50.19.



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