Please ensure Javascript is enabled for purposes of website accessibility

Why Westport Innovations Inc. Is Ready to Rebound

By Brian D. Pacampara, CFA – Feb 19, 2014 at 9:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Does this analyst make a good case? Or is it just more noise from Wall Street?

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Westport Innovations (WPRT -10.89%) opened up 2% on Wednesday after FBR Capital initiated coverage on the alternative fuel technologist with an outperform rating.

So what: Along with the bullish call, analyst Aditya Satghare planted a price target of $20 on the stock, representing about 19% worth of upside to yesterday's close. While momentum traders might be turned off by Westport's sharp pullback over the past six months, Satghare believes the stock is too cheap to pass up given his view of a profitable business model transformation over the next three to five years.

Now what: According to FBR, Westport's risk/reward trade-off is rather attractive at this point. "Investor sentiment on WPRT remains low, primarily due to concerns surrounding the company's path to profitability," noted Satghare. "We, however, believe that increasing R&D efficiency, management's focus on cost control, and new partnerships for the HPDI 2.0 product and high-horsepower applications should increase investor comfort in Westport's ability to profitably participate in the increasing use of natural gas in the on-road trucking, high-horsepower, and light-duty segments." When you couple that positive outlook with Westport's still-beaten down price -- off more than 50% from its 52-week highs -- it's easy to agree with FBR's bull stance.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Westport Innovations. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Westport Fuel Systems Inc. Stock Quote
Westport Fuel Systems Inc.
WPRT
$0.90 (-10.89%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.