Westport shares slide on revenue forecast cut

Tue Oct 30, 2012 4:16pm EDT

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(Reuters) - Shares of Westport Innovations Inc (WPT.TO) fell as much as 18 percent, a day after the engine developer cut its full-year revenue growth forecast to about 30 percent from 50 percent.

Westport, a developer of technology that allows truck and bus engines to run on natural gas, said on Monday that customers were slashing inventory and delaying decisions to complete orders due to a lack of fueling infrastructure.

"The 30 percent number is a meaningless number ... what they are not saying is that the second half of the year will actually be negative growth," said Jason Zandberg, an analyst at PI Financial Corp. "Their business is going to contract and that is why you are seeing a drop in the stock price."

Westport, which already has contracts with General Motors Co (GM.N), Caterpillar Inc (CAT.N), Cummins Inc (CMI.N) and Ford Motor Co (F.N), said on Tuesday it had signed an agreement with Indian carmaker Tata Motors Ltd (TAMO.NS) to develop an engine for light- and medium-duty trucks and buses.

The news failed to make an impression on Westport's shares, which fell to a low of C$23.31 on the Toronto Stock Exchange before closing at $24.19, down 14.4 percent. The stock was one of the top percentage losers on the exchange.

"Their top line has been growing but the bottom line has been atrocious but now that they have stated that their top line is also contracting, if you combine that with their lack of discipline and spending, you would expect to see pretty large losses," Zandberg said.

The company, which has posted a loss for the first two quarters of this year, said it now expected full-year revenue of $340 million to $350 million. The Vancouver-based company had earlier forecast revenue of between $400 million and $425 million.

Jefferies & Co cut its price target on the company's U.S.-listed shares to $45 from $55. The U.S. shares last traded at $28.41 on Friday.

(Reporting by Shounak Dasgupta and Bhaswati Mukhopadhyay in Bangalore; Editing by Maju Samuel and Ted Kerr)

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