One day after winning a modest-size contract to supply wind turbine electrical control systems to a wind turbine manufacturer in India, shares of American Superconductor (AMSC 5.35%) shot 10% higher this morning. As of 11:55 a.m. ET, the stock remains up 8%.
Helping to sustain the momentum: A price target hike this morning from investment bank Craig-Hallum, which specifically cited the Indian contract as a reason to buy American Superconductor stock.
Super news for American Superconductor
As American Superconductor announced yesterday, India’s Inox Wind Limited placed an $8 million order for control systems for its wind turbines. This was a “follow-on” order — meaning Inox is already an American Superconductor customer. Inox is also a pretty enthusiastic customer, having made American Superconductor its exclusive supplier of these systems. Also, this new order is bigger than the last, and Inox asked for “immediate” delivery of the control systems.
That also means the revenues from this contract will all be recorded this year.
In a note today, Craig-Hallum argued the order — worth about 7% of American Superconductor’s annual revenues all on its own — justifies raising its price target on the stock by about 17%, to $14 per share. The banker is looking for additional good news in American Superconductor’s Q3 earnings report, which will probably come out early next month, as TheFly.com reports.
American Superconductor’s earnings forecast
Craig-Hallum isn’t the only analyst feeling optimistic about American Superconductor stock, either. According to projections collated by S&P Global Market Intelligence, Q3 revenues are expected to soar as much as 42% year over year next month, to $34 million.
That won’t be enough to turn the company profitable, unfortunately. Analysts are expecting American Superconductor to report a loss of about $0.14 per share for the quarter, as calculated according to generally accepted accounting principles (GAAP) — and to keep losing money through at least 2026. Still, such a result would be much better than the $0.34-per-share loss American Superconductor reported in last year’s Q3, and continue a trend of bigger revenues and smaller losses at the renewable energy company.
I’m not ready to call the stock a buy just yet (although Craig-Hallum does). But I will admit that business seems to be improving for American Superconductor.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
