Shares of Westport Fuel Systems Inc (NASDAQ: WPRT) are climbing the ladder after a rollercoaster first quarter. Since the start of the second quarter, the stock has rallied by more than 40%, in what is turning out to be an inflection quarter after a harrowing crash last year.
WPRT Price Analysis
Investor reactions to impressive first quarter financial results are one of the reasons why Westport Fuel is flying high. The results came ahead of expectations a development that continues to strengthen the stocks market sentiments.
The results beat analysts’ expectations both on revenue generation, as well as net earnings, all but fuelling suggestion that the worst is finally behind. In addition, the stock has won an analysts upgrade consequently fuelling the upside action.
The stock has since rallied past the $2.10 critical resistance level. The emerging uptrend is staring at resistance at the $3.60 mark. A spike followed by a close above the $3.60 mark should open the door for the stock to make a run for the $4 a share mark.
Conversely, support on any pullbacks after the recent spike is seen at the $2.10 support level. Above the support level, the stock is likely to continue edging high in continuation of the emerging uptrend. However, a breach of the support level could give short sellers a reason to come back and continue pushing the stock lower in continuation of the long-term downtrend.
What Does Westport Fuel Systems Do?
Westport Fuel Systems is engaged in the manufacturing and distribution of alternative fuel systems as well as components for the transportation application. The Company offers fuel systems in a range of alternative fuels such as liquefied petroleum gas and compressed natural gas as well as hydrogen.
Why is Westport Fuel Systems Skyrocketing?
Shares of Westport Fuel Systems are skyrocketing on the confirmation that the company’s core business is doing well depicted by impressive Q1 financial results. According to the Chief Executive Officer, Q1 financial results validate the Company’s strategy while also reflecting improved performance across multiple businesses.
The alternative energy system company generated a net loss from continuing operations of $0.02 a share, beating consensus estimates of a net loss of $0.04 a share. Revenue in the quarter came higher at $73.2 million compared to consensus estimates of $65.4 million. Transportation revenues were up 15% year over year.
Gross margin in the quarter increased by $2.6 million to $17.2 million, attributed to an increase in revenues.
“Our diversity of commercially available products applicable to the full range of transportation applications and available in markets around the world are the key to our improving results,” Johnson said. “Favorable macro-economic factors and stricter emissions regulations are driving OEM and consumer demand for our market-ready alternative fuel technologies,” stated CEO David Johnson.
Growing demand for environment-friendly vehicles among customers as well as original equipment manufacturers sets the stage for an impressive year in revenue generation.
Demand for appropriate fuel systems as well as components is on the rise presenting a massive opportunity that the company is capitalizing on with its array of alternative energy systems. Strong demand for appropriate fuel systems should continue to drive the Company’s growth momentum.
Reports that the European Parliament is planning to pass first C02 regulations for heavy-duty vehicles is another development that could have a significant impact on Westport Fuel systems core business. Proposed legislation if approved would require heavy-duty truck original equipment manufacturers to achieve an average reduction of CO2 emissions of 15% by 2025 and 30% by 2030.
“The Westport HPDI 2.0™ system meets the expected 2025 target today and with blends of renewable natural gas, may enable CO2 emission reductions in excess of the 30% target that is expected to come into effect in 2030,” stated David Johnson, Chief Executive Officer of Westport Fuel Systems.
After a rollercoaster 2018, Westport Fuel Systems has bottomed out thanks to improvement in underlying fundamentals. Narrowing net loss, as well as an increase in revenues, are some of the milestones that continue to prop up market sentiments.
The passing of legislation requiring equipment manufacturers to reduce C02 emissions is another development poised to create huge opportunities for the Company’s alternative energy systems. The stock is likely to continue climbing the ladder as fundamentals continue to improve.
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Disclosure: We have no position in WPRT and have not been compensated for this article.