Jefferies & Co. Initiates Buy Rating on American Superconductor (AMSC)

Jefferies & Co. is out with a research report this morning, where it initiates a Buy rating on American Superconductor AMSC; it has a $35.00 price target on the stock. The Jefferies analysts said, “In our view AMSC is the best way to invest in the burgeoning wind market in China as well as the growing smart grid industry through its grid interconnection and power management solutions.” They added, “AMSC reported FY09 results above prior expectations and the high range of guidance. Management has demonstrated consistent execution over the last six quarters and we believe guidance for FY10 is likely conservative given that 90% of revenue is already in backlog. Wind is expected to drive 85% of FY10 revenue.” They also noted, “Concerns about AMSCs excessive exposure to Sinovel have been partially alleviated with: 1) a new $445M 30-month contract for 1.5MW turbines; 2) a contact for 3MW turbines; and 3) an R&D agreement for 10MW turbines. These contracts reflect Sinovel's continued commitment to AMSC and provide significant visibility for 2011 revenue and beyond with ~$1B now in backlog.” The Jefferies analysts also said, “We believe AMSC's DVAR products for grid interconnection are likely to see increasing demand along with growth in wind and solar PV farms. AMSC also has an opportunity to benefit from smart grid projects using its superconductor wire and a more highly-developed fault current limiter (FCL) product.” Learn how to find the best stocks to trade each day in our 70 page E-Book and 90 minute online video for free.