With Expectations Of Faster Organic Growth, Cowen Upgrades Itron

Water resources name Itron, Inc. ITRI is poised to benefit from additional capex spending, according to Cowen. 

The Analyst

Cowen analyst Jeffrey Osborne upgraded shares of Itron from Market Perform to Outperform and increased the price target from $80 to $84.

The Thesis

Itron's stock has worked the past two years largely on the basis of "self-help" initiatives rather than organic growth, Osborne said in a Thursday note. But new capex spending on Itron's distribution grid in North American, Europe, the Middle East, Africa and southeast Asia could change that, he said. 

The analyst sees spending shifting toward distribution automation and software analytics — areas the combined Itron and Silver Spring Networks, or SSNI is prepared to address. 

The SSNI acquisition is progressing well, and the combined company backlog is near $3 billion, the analyst said. The 1.5 times book-to-bill for Itron organically suggests an acceleration in Itron's electric gas, and water markets, according to Cowen. 

"While our bullishness largely lies in the electric area, management was very constructive on 2018 and water trends," Osborne said.

With backlog and awarded projects growing in recent quarters, Itron has delivered with cost cuts and exits from low-margin electric meter product lines, Osborne said. This could lead to faster earnings per share growth relative to top-line growth in 2017, he said. 

"The self-help restructuring story has driven the stock in '16/'17 and we see organic growth accelerating evidenced by the BTB of 1.5x." 

The Price Action

Itron shares are up 8 percent over the past year and were up 6.71 percent at $74.70 at the time of publication Thursday afternoon. 

Related Links:

Gates Industrial Shares Offer Attractive Price For Industrial Momentum: Morgan Stanley

Nordson Is A Core Industrial Tech Holding, DA Davidson Says Ahead Of Q1 Print

Posted In: CowenJeffrey OsborneAnalyst ColorUpgradesPrice TargetAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.