Jefferies & Co. Initiates Buy Rating on EnerNOC Inc. (ENOC)
Jefferies & Co. is out with a research report this morning, where it initiates a Buy rating on EnerNOC Inc. (NASDAQ: ENOC); it also has a $38.00 price target on the stock.
The Jefferies analysts said, “We believe ENOC continues to benefit from strong momentum in the PJM capacity auctions and has executed well C&I customers. Although PJM continues to drive the majority of revenue growth, ENOC is visibly emphasizing their energy management business by releasing an integrated, branded energy management platform.”
They added, “ENOC has consistently demonstrated greater than expected MW additions from C&I customers for its capacity bidding program, primarily in the PJM region. We estimate ENOC had ~2,625MW accepted in the 2012/13 PJM auction held in 2009 for 35% market share; ENOC announced it cleared ~3,900MW for the 2013/14 auction held in May 2010, valued at ~$200M of revenue.”
They also noted, “Although electricity demand weakened during the worst of the recession, utilities and government agencies forecast increasing electricity usage over the longer term as well as more stringent carbon regulation. Demand response can alleviate the need for additional generation and reduce carbon emissions.”
The Jefferies analysts closed by saying, “We value ENOC based on 12.5x our CY2011 adjusted EBITDA estimate of $63M to arrive at a PT of $38. Our target multiple is in line with the smart grid peer group multiple and is justified given ENOC's strength in the C&I demand response market and demonstrated record of execution. Risks include: 1) competition from other DR/AMI providers; 2) regulatory risk; and 3) a dilutive or poorly integrated acquisition.”
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