Barclays Capital today cut its target price for Ormat Industries Ltd. (TASE: ORMT) subsidiary Ormat Technologies Inc. (NYSE: ORA) to $36 from $38, although it reiterated its "Equal weight" recommendation for the share. Barclays' analysts Gregg Orrill and Daniel Ford cited the company's announcements this week that its Puna geothermal plant in Hawaii and its North Brawley plant in California are running below capacity.
Barclays therefore lowered its earnings per share estimate for Ormat Technologies to $1.42 in 2010 and $1.83 in 2011, from $1.52 and $1.86, respectively, to reflect the lower electricity production and revenue from the two plants. Based on Ormat's announcements, the analysts' estimates assume that electricity production at North Brawley will rise from the current 17 megawatts (MW) to 50 MW by the end of 2010, and that production at the Puna plant will be 17 MW through the third quarter before reaching full capacity of 30 MW in the fourth quarter.
Orrill and Ford also pointed to Ormat Technologies' announcement that it has signed an agreement to acquire 100% of HSS II LLC, which includes the Hot Sulphur Springs geothermal project in Nevada. The project is in the advanced development stage and has one successful well. The company plans to construct a plant on the site for 2012. The project will sell up to 40 MW to Nevada Power through a 20 year power purchase agreement (PPA) with the first stage of development at 16 MW. They estimate that the project could add in the range of $20 million to the company's EBITDA.
Ormat Technologies' share closed at $31.28 on the New York Stock Exchange yesterday, giving a market cap of $1.55 billion. Ormat Industries' share fell 0.7% by midday on the TASE today to NIS 31.28, giving a market cap of NIS 3.74 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on February 10, 2010
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