ETX: Executing Remarkably

MARVIN WOLFF, Paradigm Capital Inc. (10/25/2010)
"Etrion's pipeline of 200MW is very conservative and several projects, including a 63MW opportunity, are not included in the stated pipeline. Feed‐in‐tariff (FIT) programs in Italy are administered by the government but funded by the electricity consumer. . .thus are considered low risk by the banking consortiums. The company has executed remarkably this year going from 0MW of capacity in January 2010 to 40MW today on its way to 50MW connected and a total of 60MW possible exiting 2010. Etrion appears to be on track to have close to 100MW by the end of 2011, consistent with our forecast. The company has established a strong foothold in Italy and is considering expansion into Spain, the UK and Greece, on projects that are fully bankable with at least 80% D/E funding.

Etrion's business model is demonstrating low risk yet strong returns accompanied by a steep growth curve lasting into 2012 and beyond. We maintain our target price of $1.85 for 2011 and $2.45 for 2012 based on 12x our EBITDA forecast that equates to an 8% cash yield. The stock is currently trading at 8.2x 2011 EBITDA and 5.1X 2012 EBITDA. We remain of the view that Etrion will become a large solar independent power producer with several hundreds of MW connected to various grids over the next two to three years. BUY."

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