OT: Beacon Power Corp. (BCON)
Capstone Up 22%; Investors Cheered By Energy Bill
DOW JONES NEWSWIRES August 8, 2005 2:24 p.m.
By Tim Paradis Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Shares of Capstone Turbine Corp. (CPST) jumped as much as 30% Monday, moving well above a 52-week high set Friday, as investors appeared cheered by the company's prospects under a new federal energy bill and a recent tie-up with KeySpan Corp. (KSE).
The company, whose microturbines are smaller versions of turbines used by utilities and designed for generating energy in commercial settings, has seen its share price more than triple since early June.
Walter Nasdeo, an analyst at Ardour Capital Partners LLC, said that while he believes investors have reason to be pleased by a "rash of positive announcements" from the Chatsworth, Calif., company within the past six months, he said a cautionary stance is prudent ahead of the company's planned release of fiscal first-quarter results on Wednesday.
Nasdeo, who in a note last week raised his price target on the stock to $3 from $2.10, said he nevertheless believes that the period will prove "pretty strong."
"Obviously, we have to apply analytical rigor here. We have to have more than an emotional response," he said, referring to an investors' desire to ferret out those companies that might see a windfall from the energy bill, which President Bush was expected to sign Monday. The bill provides a 10% tax incentive for businesses to buy and conserve energy with microturbine generators, the company noted in a statement Monday.
As a result of the legislation, customers will be able to more quickly recoup their investment, the company said. In California, Capstone estimates, customers could now get a return on their investment in as few as two years, rather than three before the existence of energy bill's incentives. In New York, the time would be reduced by 8 months to 28 months, the company said. Capstone's microturbines work using a variety of fuels, ranging from natural gas to kerosene to methane, which comes from landfills, among other sources.
"This is a stock that was under a dollar six weeks ago. The energy bill has been certainly a spotlight around in the alternative energy space," Nasdeo said. He contends that some investors might have been drawn to the fact that the company's products are already being sold - it has shipped more than 3,000 microturbines world-wide - and are relatively easy to understand as compared to some less traditional technologies such as hydrogen fuel cells and solar power systems.
A Capstone spokeswoman said the company didn't attribute the stock's sharp increase Monday to anything in particular other than overall investor enthusiasm for a spate of recent announcements from the company, which have concerned its efforts to make it easier for potential customers in New York City to install the company's microturbines and the agreement with KeySpan.
Under the cogeneration deal with KeySpan, announced July 25, the Brooklyn, N.Y., utility will endorse the use of Capstone microturbines for some commercial customers as a way to keep peak-hour demand from overwhelming KeySpan's capacity. The company, which operates in New York City and nearby Long Island, will be forced along with other power providers to comply with grid-reliability standards laid out in the energy bill. Reducing demand from certain heavy users likely would prove cheaper for KeySpan than spending to boost its capacity, Nasdeo said.
Nasdeo, who doesn't own Capstone shares and whose firm doesn't do business with the company, expects Capstone to report a loss of about $9 million on revenue of about $6.4 million. Capstone has yet to turn a profit, reporting a loss of $39.4 million for the year ended March 31.
Capstone has "put some of its ducks in a row and is starting to move some products out the door," Nasdeo said.
The stock recently changed hands at $3.25, up 59 cents, or 22%, surpassing the 52-week high of $2.78 logged Friday. The shares hit a 52-week low of 89 cents on June 9. Volume was recently 5.5 million shares, compared with average daily volume of 1.13 million shares.
Also Monday, Beacon Power Corp. (BCON), a Woburn, Mass., maker of technology aimed at preventing power disruptions in electrical grids, likewise saw its shares top a 52-week high set Friday. The stock recently changed hands at $3, up 67 cents, or 29%. The shares' previous 52-week high was $2.35 and its low of 25 cents was Aug. 6 last year. Volume recently surged to 21.9 million shares; average volume is 1.52 million shares. |
