Westport Innovations.Westport Innovations
When Westport Innovations Inc. released weak earnings earlier in June, the company's stock plummeted about 10 per cent. On Tuesday that loss was entirely wiped out following the announcement of a new agreement with General Motors to research natural gas engine technology.
It's a quick and much-need catalyst for a company that was starting to feel the heat because both its top and bottom lines weren't meeting the expectations analysts have been setting.
Plus, the company still isn't churning out profits, despite enough investor interest for a market capitalization just north of $1-billion. Analyst Rupert Merer at National Bank Financial expects the company's earnings before interest, taxes depreciation and amortization losses to continue through 2011 and beyond.
Mr. Merer does note that the deal is monumental, but it could take a while for it to bump Westport's bottom line. "While this is a ground-breaking move for a North American auto manufacturer - particularly GM, with their strong light-duty focus - we believe this is the first step in a long development process that will need to see significant incremental advances in efficiencies and investment in fueling infrastructure before the R&D will translate into sales."
Westport has caught a lot of people's attention with its technologies that allow engines to operate on clean-burning fuels, but the company continues to be plagued with operating losses and has tapped public investors to keep funding these shortfalls.
Tim Kiladze