American Superconductor Wins With Wind
Ruthie Ackerman, 06.10.08, 1:25 PM ET
forbes.com
American Superconductor is in the right place at the right time. The maker of wind-turbine components saw its shares soar Tuesday after it announced at large order from a Chinese company.
On Tuesday, the semiconductor-machinery supplier, which generates most of its sales from the wind power industry, announced it received a $450.0 million order for core electrical components for wind turbines from China-based Sinovel Wind.
Investors were pleased. American Superconductor shares soared 23.0%, or $8.28, to $44.36, in afternoon trading on Tuesday. At its current price, the company has a stock market value of $1.9 billion, 16.9 times its sales of $112.4 million in the year through March. American Superconductor lost $25.4 million in the latest year. Analysts polled by Thomson Financial had expected the company to lose $9.0 million in the current year and $1.0 million in the year through March 2010 before the Sinovel contract was announced.
The contract calls for shipments to begin in January 2009 and increase through December 2011.
As the race for alternative energy heats up, demand for wind turbines is soaring. The problem: a worldwide shortage.
American Superconductor said that China's installed base of wind power capacity grew more than 130.0% in 2007, to approximately 6.1 gigawatts. It could exceed 120 gigawatts by 2020, according to the Global Wind Energy Council's Global Wind 2007 Report.
Kaufman Bros. analyst Theodore O'Neill reiterated his “Buy” rating on the company and raised his price target to $53 from $37. He predicted the company could be producing components for 1,000 wind turbines per quarter by the end of 2010.
O'Neill said the company now has eight wind-turbine customers and expects it to announce two more by the year's end. |
