Akeena Solar’s (AKNS) Q2 earnings were a flop yesterday. The solar power systems installer missed consensus on EPS (-$0.18 vs. -$0.16 consensus) and completely blew revenue ($7.1 million vs. $11.1 million consensus).
But AKNS bull, Theo O’Neill of Kaufman Bros., is unfazed:
We are positive on these shares as we believe that management has hands-down developed the best residential solar solution based on appearance and price. We are positive because we believe that Akeena would make an ideal acquisition target when the solar industry begins consolidation. Having said all that, the company missed 2Q08 revenue expectations by a wide margin
O’Neill feels no need to revise his overall thesis on the stock because he feels the likely reason for the miss was the delayed renewal of the Federal Investment Tax Credit. He’s confident the legislation will eventually pass. We share the view that the ITC will eventually be passed, but given that we’re aleady nearly halfway through Q3, Akeena seems poised to bomb another quarter.
We believe the now accepted loss of the Federal Investment Tax Credit in 2008 is the reason for the miss. All other indicators of demand remain very high. The 18-month depletion of the solar residential credits resulting in $170 million of residential solar panels in the New Jersey program and the demand in the solar program in Connecticut demonstrate the robustness of demand.
…when the investment tax credit is re-authorised by Congress (which we believe it will be), Akeena stands to benefit in a major way.
OK, but when will that be?
Kaufman Bros. maintains BUY on Akeena Solar (AKNS), target $12.
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