Capstone Turbine (CPST) shares were higher 12% on Wednesday as Oppenheimer upgraded the rating on the company’s stock to outperform from perform while introducing a $2 price target.
“First, the company has effectively rationalized its overhead while working through a difficult period for demand,” Oppenheimer said in a note to clients. “At the same time, with revenue approaching $100 million annually, CPST shares are trading at an enterprise value of $24 million including $10 million in net cash.”
The broker said it expects order activity to pick up and estimates the company will reach EBITDA break-even in FY19 as that order activity translates into sales growth.
“We are introducing a $2 PT and note that, if the company reaches profitability, there is potential upside to our PT,” Oppenheimer said.