Dallas, Texas 03/03/2014 (FINANCIALSTRENDS) – Capstone Turbine Corporation (NASDAQ:CPST) which is into industrial electric equipment manufacturing has seen its stock melt down by close to 7.2 percent during trading on 28th February. This dip on the last day of trading in the previous week was preceded by an huge 10 percent increase in its market valuation during trading the previous week, when rating agency FBR Capital had upgraded the stock to an outperform rating from previous hold rating. The price target for the stock has been raised to $2.5 per share.
The reason for the upgrade has been linked to a positive commentary coming from analysts about the ability of the micro turbines produced by Capstone Turbine Corporation (NASDAQ:CPST) to work on multiple varieties of “natural gas as a fuel is at an inflection point and that Capstone, with its reliable and versatile microturbine product, is well positioned in this market as it can operate on a variety of fuel forms, including natural gas, diesel, flare gas, kerosene, propane, and even biogas”.
Readers should note that in the second week of February, Capstone Turbine Corporation (NASDAQ:CPST) had announced results from its third quarter operations in which it reported revenue increase of 11 percent to reach $37 million in comparison to 3Q13. This was well below the street expectation of $40.3 million as indicated by pre earnings call poll taken out amongst analysts. On the positive angle, the firm announced that its gross margin went up by 20 percent for 3Q, in comparison to 14 percent reported in 3Q12.
The backlog in its order book, which is considered a firm indicator of its future revenue flow, had gone up to $160 million as against $149 million it had bottomed out in 2Q of this fiscal year. Providing a firm forecast for the final quarter of the fiscal year, the management team hoped that the continued demand for turbines is going to help the firm report profits in next couple of quarters.