Basin Water Gets Undeserved Hatchet Job (BWTR)

Jun.15.06 | About: BASIN WATER (BWTR)

Basin Water (BWTR) got a total hatchet job done on it by Francesca McCann of Stanford Group in the "Wall Street Transcript" (sub. required) yesterday. She compared BWTR to the IPOs of yesteryear.

I added here yesterday at $10-$10 1/2. (Edit: the stock closed in the $9's so added a bit early)

Yep, there are risks with any young small company going forward. But BWTR will grow revenues 200% in '06 I believe, and will earn in the 25 cent per share ballpark. McCann was quoted as saying this sort of anticipated growth was 'pie in the sky'. Not really, as BWTR will have two revenue generating deals in their pocket for full year '06 that they've not had previously. I suspect '07 earnings could easily be 40-50 cents a share.

Again, I can understand why a small risky company may not be someone's cup of tea but the comparison to the old dotcom IPO days is foundless and outrageous. Amazed, too, that the market took this down 20% today on that comment.

BWTR has positive net margins and a sub $200 million market cap. At $10 it is trading 20-30 X's my forward earnings estimates for '07. How is that remotely dotcom'ish? Those IPOs often had $2+ billion market caps, no net margins and no earnings estimated going forward....well going forward ever. Just a total hatchet job in comparing this IPO with those dotcoms of yesteryear. Amazed too they took this down 20% today on that Sanford analyst comment in this 'Wall Street Transcript' thing.

It is fine if she does not like BWTR; that is what makes a market. I happen to like it here around $10. However she is completely off base in comparing BWTR to the worst of the worst IPOs we've ever seen. It's not. I analyzed that dreck coming out in 2000, those bottom of the barrel dotcoms such as and the like. There is NO comparison with BWTR and those things, none. BWTR is simply a small growing company that has recently turned the corner into profitability. I've no issue with an analyst or participant not liking it for a variety of reasons --- these little fast growing companies nearly always do look expensive on a trailing basis. However to throw it under the bus by stating BWTR IPO reminds one of the worst of the worst IPOs ever to hit the market is ridiculous. C'mon Stanford, show a little responsibility here.