Knobias Clip Report (05-28-2008)
Submitted By Knobias ClipReport
AKNS: Shares Gain on Analyst Initiation; $12 Price Target
Wednesday’s session saw energy slip at the open only to regain its footing and steam higher, back to the $130 level while gaining back the losses seen over the past few days. The day’s range saw oil rally $5 intraday from lows in the early trading hours.
With the energy trade back on the table, one would think that solar would see a pop, but the industry was mixed with only a few seeing anything more than a marginal gain. One of the names to see an extended run was Akeena Solar Inc (AKNS).
The Company is a one of the largest national installers of residential and commercial solar power systems in the United States. The company’s new integrated solar panel system, Andalay, is the only solar panel system with integrated racking, wiring and grounding. Andalay panels offer unprecedented reliability, performance and aesthetics.
Earlier in the month, the Company reported first quarter numbers that were a bit disappointing to some investors despite the growth. Net sales for the first quarter of 2008 were $12.2 million, an increase of 94.7% compared to $6.3 million in net sales in the first quarter of 2007 and an increase of 18.7% compared to $10.3 million in sales in the fourth quarter of 2007.
Net loss for the first quarter of 2008 was $4.6 million, or $0.16 per share, compared to a net loss of $933,000, or $0.06 per share, in the first quarter of 2007 and a net loss of $4.5 million, or $0.18 per share in the fourth quarter of 2007. The reduced per share loss in the first quarter of 2008 compared to the fourth quarter of 2007 reflects an increase in the average shares outstanding during the first quarter of 2008 associated with the $26.1 million capital raise completed last November.
Going forward, the Company noted that due to recessionary conditions and increased energy prices, revenue would only increase by approximately 40% to 50% over 2007 revenue and that EBITDA breakeven, adjusted for stock-based compensation expense, would not be achieved this year.
But the earnings report didn’t dissuade one analyst from initiating the stock with Buy rating with a price target almost 100% above current levels. Kaufman Brothers started the name with Buy and a $12 target. The firm noted that they believed demand for residential solar was growing in the U.S. and that the Company’s product lineup was aesthetically superior, allowing it to take market share and build brand loyalty.
Following the initiation, shares gapped higher and closed at $6.90, almost 18% higher on the day. With much more appreciation to hit the price target, the name is certainly one to follow. But with a less than stellar outlook by management for the rest of the year, it could take the shares some other catalyst besides earnings to reach those levels. In any event, as oil continues to climb and the monthly energy bill for consumers continues to rise, solar will see increased demand over the coming summer months. Investors would be wise to watch.
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