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Friday, Oct 4
Capstone Turbine shares seen surging nearly 70% by Cowen
- Capstone Turbine (CPST +7.1%) is initiated with an Outperform rating at Cowen, whose $1.90 price target would represent a near-70% upside from yesterday's close.
- The firm projects a five-year revenue CAGR of 23%, from $128M in 2013 to $365M in 2018, and gross margin should expand to ~35% from 11.3% on higher utilization, cost reduction and lower warranty and royalty expense; operating margin should turn positive in 2015 and reach 16% by 2017.
- Thanks to a low tax rate and minimal capex, the firm says free cash flow should grow substantially from 2015, and its model yields high return on invested capital once once scale is achieved.