Clal Finance Batucha Ltd. today commented on yesterday’s financial released by Ormat Industries Ltd. (TASE: ORMT). Clal Finance says Ormat met Clal Finance’s forecasts, but it is worried about the company’s growth over the next two years. The investment house therefore downgraded its recommendation for Ormat’s share to “Market perform”, and set a target price of NIS 51, 13% above its current market price.
Clal Finance raised its target price for Ormat’s subsidiary, Ormat Technologies Inc. (NYSE: ORA) to $37.50, 2% than its current market price, and gave it a “Market perform” recommendation.
Clal Finance notes that Ormat Industries lowered its growth guidance for 2006 by 2% to $204 million, mainly because of problems at its Ormesa geothermal power plant in California and Puna geothermal power plant in Hawaii.
Analysts claim that Ormat enjoys a positive business environment, driven by rising demand for renewable electrical power in the US, Europe and Indonesia. They also see potential growth in the Philippines, in view of concern about energy shortages in the region by the end of the decade and the need to switch to alternative energy sources. Analysts also note ballooning oil prices, which are contributing to Ormat.
Nevertheless, investment houses worry about Ormat’s ability to maintain its current growth rate in 2007-08 because of the postponement of its Olkaria geothermal project in Kenya and because its projects in Nevada will come on line only in late 2009. The analysts therefore believe that Ormat will struggle to meet its growth targets for the next two years.
Published by Globes [online], Israel business news - www.globes.co.il - on August 9, 2006
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