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Electrovaya Upgraded To 'Sector Outperformer' By CIBC On Share Price Declines

 December 17, 2012 01:57 PM

(By Balaseshan) CIBC World Markets Inc. analyst David Galison upgraded rating of advanced battery maker Electrovaya Inc. (TSE: EFL) to "Sector Outperformer" from "Sector Performer" on share price decline, with $1 price target.

Electrovaya reported Q4 loss per share of $0.01 versus loss of $0.03 in Q3 and loss of $0.01 (excluding unusuals) in the previous year quarter. Results were negatively impacted by about $1.4 million ($0.02/share) in unusual items. Excluding unusuals, EPS was $0.01, above Galison's loss estimate of $0.03 and consensus loss of $0.02.

The analyst said the better-than-expected results were due primarily to a one time $2.9 million service/licensing revenue payment from Tata Motors, which had no operating costs resulting in significantly greater-than-expected gross margins. Gross margins were 83.2% versus 20.4% in Q3-2012.

[Related -Savings Glut and Financial Imbalances]

In September, Electrovaya acquired 99.6% of Miljobil (MBG) from Tata. MBG is based in Norway and has invested about $30 million in developing lithium ion battery technologies for a range of electric vehicle and other transportation applications. MBG should open up opportunities for Electrovaya in Europe.

The analyst widened 2013 loss per share estimate to $0.08 from $0.03 due to higher R&D assumptions, while introducing 2014 loss estimate of $0.06. His outlook assumes EFL secures additional contracts.

EFL is trading up 4.84% at $0.325 on Monday.

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