Barclays Capital’s Amir Rozwadowski this morning initiates coverage of “clean tech” company stocks, assigning a “Top Pick” status to Tesla Motors (TSLA), meter reading technology maker Elster Group (ELT), Power-One (PWER), and renewable energy plant maker Ameresco (AMRC), while starting A123 Systems (AONE), First Solar (FSLR), GT Advanced Technologies (GTAT), and Itron (ITRI) at Equal Weight.
Rozwadowski thinks investors in clean teach are “once bitten, twice shy,” hence the presence of stock valuations “below recessionary lows.”
Nevertheless, Rozwadowski sees rising energy demand from population growth, and relatively little build-out of the technology at present, offering “a multi-year secular growth opportunity that is too big to ignore.”
With government subsidies curtailed, Rozwadowski sees the industry’s hope pegged to demand for products with “attractive cost/value proposition,” in electric vehicles and energy efficiency; they’ll likely do better than light-emitting diodes and solar energy, he thinks, which are weighed down by overcapacity and “tightening incentives,” he thinks.
Tesla may ride the broader wave of electric and hybrid vehicles, thinks Rozwadowski:
Given increased focus on reduced automotive emission and the rising demand for non-ICE (internal combustion engine) or enhanced fuel efficiency, we believe the broader electric vehicle market is poised to gain meaningful adoption over the next several years. We believe the increasing availability of broader options by established automotive OEMs should enable increased consumer awareness, and those vendors that cater to high discretionary income customers should be better positioned toward capitalizing on early adopters in the market.
Total electric vehicle units may hit 4.8 million units worldwide by 2020, he thinks, though the curve will be lumpy.
Tesla has the right approach to a choppy electric vehicle market by tapping the high-end consumer first, he thinks. He models Tesla losing $2.15 a share this year and $1.97 next year, on revenue of $212 million and $553 million. Hence, he values the stock as a 37 multiple of 2013′s projected $1.02 per share, or 14 times 2014′s possible $2.50 per share.
Tesla shares today are up 81 cents, or 2.6%, at $32.14.
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