Capstone Turbine Corporation (NASDAQ:CPST)
Capstone Turbine Corporation (NASDAQ:CPST) shares fell 7.76% after the leading manufacturer of microturbine energy systems announced a reduction in its quarterly operating-expense target. The company has lowered, following the restructuring of engineering assets and other cost reduction activities, its target from $5.5 million per quarter to $5 million.
CPST Stock Performance
Shares of Capstone Turbine had initially recorded a new 52-week high of $1.38 a share after Oppenheimer analysts upgraded the stock to an ‘outperform’. However, the stock came under pressure in Friday’s trading session as it dropped to end the week at $1.70 a share.
Capstone Turbine Corporation (NASDAQ:CPST) is currently trading in an uptrend despite Friday’s sell-off. A price target of $2 by Oppenheimer analysts appears to have strengthened sentiments on the stock. The analysts see potential upside in the stock price, given that the company is set to move its manufacturing operations to a more affordable space as it also continues to aggressively manage its supply chain.
Capstone Turbine Corporation (NASDAQ:CPST) has also announced that it is completing the previously announced $5.2 million retrofit program. The program seeks to upgrade non-signature series C100 and C200 microturbine to provide improved performance and reliability.
According to Capstone Turbine Corporation (NASDAQ:CPST), improved reliability of the microturbine coupled with high performing Signature series microturbine could drive higher gross margins in the accessories, parts, and service divisions.
“We need to drive Capstone to profitability as quickly as possible in order to fuel Capstone’s launch to the next level of product development and market penetration. Our aftermarket service business growth is a critical element of our multi-point strategic plan to quickly achieve Adjusted EBITDA breakeven,” said CEO Darren Jamison.
Capstone Turbine Corporation (NASDAQ:CPST) is targeting revenues of up to $10 million, on gross margins of 50%, for its accessories, parts, and service business. The company has moved from a high-cost, three department research and development effort to a single consolidated department in pursuit of lower costs and improved efficiency on product optimization. Operating expenses as a result dropped 42% from $10.5 million as of Q1 2016 to $6.1 million in Q3 2017.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.