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With BioteQ Environmental Technologies Inc. shares having experienced a pullback, Canaccord Adams analyst Sara Elford has upped her recommendation on the Vancouver-based water treatment company to “speculative buy” from “hold”.

In a note to clients, Ms. Elford said the potential upside to her target price of C$3.50 is now 21% “which we believe warrants an upgrade in our rating.” The stock, which traded above C$4.50 last November, is now below C$3.

However, she said BioteQ reported second-quarter revenues of C$1.5-million (up 41% year-over-year) that were lower than her projections of C$2.1-million. However, her earnings estimate of a C1¢ loss per share was in line with the company’s actual results.

 “Adjusting for copper concentrate from [the] Mt. Gordon [facility] that did not ship prior to quarter end due to a customer delay in securing transport, revenue would have been C$900,000 higher and slightly ahead of our forecast.” Ms. Elford also noted that BioteQ expects to commission four new plants a year, each having a payback of three years or better.

BioteQ builds, owns and operates plants that treat acid-contaminated water to recover metals that can then be sold.

The Canaccord analyst also reduced her 2008 revenue and earnings forecast slightly, to C$13.6-million and profit of C1¢ from C$14.3-million and profit of C2¢.Regarding her forecast of C$27.5-million revenue and profit of c14¢ a share, she said,

Given that actual project timing and economics are hard to predict for new plans until steady state production is achieved, investors should be prepared for fairly regular tweaking to our forecasts.

Source: BioteQ: A Speculative Buy?