Investors in green stocks are getting harder to please. And this week, those invested in EnerNOC are downright displeased.
EnerNOC doesn’t offer an alternative energy to oil. Instead, it helps companies reduce their energy costs by managing their usage more efficiently. At a time when oil prices have breached the $100-level while few large-scale alternatives are available, the demand for this approach is increasing among companies hoping to keep their own costs down.
That popularity can be seen in EnerNOC’s growth. Its revenue grew by 234 percent in the most recent quarter and more than tripled in all of 2007. And its gross margin has been rising. Gross profit rose to 36 percent in the latest three-month period, up from 23 percent a year earlier. EnerNOC posted an operating loss, but as a share of revenue that loss also shrank, to 48 percent from 68 percent.
Yet that wasn’t good enough. The problem is that EnerNOC still posted a net loss, and one that was significantly higher than expected: 48 cents a share, compared to the 30-cent loss that analysts had forecast. A bump in R&D hiring was the key culprit.
Over at Seeking Alpha, a post noted that some analysts are now looking for the stock to bounce back as earnings in coming quarters are forecast to show renewed strength. JNP Securities dropped its price target to $35 from $50 but sees a buying opportunity. Morgan Stanley says a June rebound is a possibility. I don’t mean to fault analysts — they usually do a good job making hard calls — but this sector seems especially unpredictable these days, as recent surprises like Suntech Power (to the downside) and First Solar (to the upside) have shown.
Shares of EnerNOC dropped 36 percent yesterday and are down another 14 percent today, so there’s no bounce yet. For now, the market remains stubbornly hard to please.