“This is the third time in four quarters that maintenance issues prompted an earnings shortfall.”
Citigroup Global Markets has given Ormat Technologies Inc. (NYSE: ORA) a “Hold/high risk” recommendation, a day after the company published a profit warning for the first quarter of 2007. Citigroup gave a target price of $42.50, 16.5% above yesterday’s closing price of $36.49.
Citigroup says, “The shortfall was caused by a multitude of factors including: an increase in maintenance/repair work performed on five geothermal facilities, a reduction in revenues related to permitting delays, construction costs at the Products Segment (and for geothermal plant construction costs in general) continue to escalate above management's expectations, and a one-time settlement related to royalty payments at Steamboat 1. This is the third time in the preceding four quarters where maintenance issues prompted an earnings shortfall versus analysts’ expectations.
“Our conversations with the company this morning suggest repairs at two of the facilities (Heber and Ormesa) are already complete. Status on the remaining three facilities will be provided on the upcoming first quarter earnings call on May 8. The company would not quantify a breakdown of one-time costs versus ongoing issues, but expects to provide more color in its financial report for the first quarter. We will likely adjust our financial outlook at that time.”
Published by Globes [online], Israel business news - www.globes.co.il - on May 1, 2007
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