By Tim Kiladze
Westport Innovations Inc. (NASDAQ:WPRT) has been on an tear, with its shares more than doubling in the past year. That's quite the feat for the Vancouver-based maker of natural gas engines that are designed for commercial vehicles.
Using this momentum, the firm just raised $274-million (U.S.), and shareholders jumped at the deal. After a blockbuster 2011, during which Westport’s stock climbed 84 per cent, the company's shares have since jumped another 30 per cent. And just last week, the firm announced that sales for the calendar year ended Dec. 31 are expected to hit $260-million, up more than 80 per cent from the prior year.
Yet after such a huge run, the skeptics are starting to raise their hands. Can the company deliver on such lofty market expectations? Or is this a story reminiscent of the tech bubble?
While Westport's revenue gains are certainly good news, the opposite end of its income statement is still in rough shape. Westport continues to churn out quarterly losses, the latest of which was $13.2-million, and on the same day that the firm announced higher expected revenue, it also projected a new quarterly loss that is much deeper than the Street anticipated.
Given the hole the firm is already in, shareholders may need to wait it out before they see a just market value. “While 50 per cent sales growth is impressive in any one year, Westport will need to maintain this growth rate into 2018-2019 to justify the company’s current valuation,” noted CIBC World Markets analyst Michael Willemse. Currently, Westport is worth $2.14-billion.
Still, CIBC bumped its 2012 revenue estimate up to $425-million and increased its price target to $35 -- which is lower the $44 market price.
Regardless of how invesors ultimately react, few Canadian firms were able to get in on the latest action. Westport is dual-listed and U.S. dealers dominated the deal, though Canaccord Genuity was able to get a piece of the pie.