UPDATE 1-Orion Energy shares tank on disappointing revenue view
(Adds comments from analyst notes, updates share movement)
July 16 (Reuters) - Shares of lighting company Orion Energy Systems Inc (OESX.O) lost half their value on Wednesday, a day after it forecast first-quarter and fiscal year 2009 revenue below market expectations, leading to analyst downgrades.
The company, which went public in December of 2007, cited the revenue shortfall to a focus on building and developing its sales team that led to spending less time on closing new sales.
Orion sells energy efficient lighting systems to corporations including Coca-Cola (KO.N) and Kraft (KFT.N).
The company also blamed the weak economy but said it has not lost any customers.
Still, the news was a blow to Orion which pulled off a successful IPO, sending its shares soaring in their market debut. They peaked on Dec. 26 at $22.46.
The shares tanked in early trade on Nasdaq, hitting $4.48 before recovering to $5.25. They closed at $8.60 on Tuesday.
"We see the development as a major negative for the stock as we had based our overweight rating on the premise that products promoting energy efficiency with quick payback periods of 1-2 years against a backdrop of rising energy costs would not experience a lengthening of sales cycles," Thomas Weisel Partners analyst Jeff Osborne said in a research note.
Osborne said the company's 25 percent to 28 percent fiscal annual revenue growth forecast was impressive considering the current macroeconomic picture, but he believes the growth is a lot lower than expectations of investors who bought into the story at the time of the IPO.
Thomas Weisel Partners downgraded the stock to "marketweight" from "overweight", and reduced its fiscal 2009 revenue estimate to $92.5 million from $121.9 million and earnings per share estimate to 16 cents from 36 cents.
Northland Securities lowered its rating to "market perform from "outperform."
"We believe that general deterioration in the C&I (commercial and industrial) market contributed to the struggles experienced by Orion Energy," Northland Securities analyst Eric Stine said in a note.
"In our view, the timing and size of this revenue shortfall is troubling and calls into question the company's execution and standing in the energy efficient lighting market, " Stine said, who is reviewing his earnings per share estimates on the company.
Orion said it expects first-quarter revenue of $16.1 million to $16.3 million, while analysts were looking for revenue of $21.9 million, according to Reuters Estimates.
For fiscal 2009, Orion expects revenue of $101 million to $103 million. Analysts were expecting revenue of $104.8 million. (Reporting by Anurag Kotoky and Ajay Kamalakaran in Bangalore; Editing by Jarshad Kakkrakandy, Bernard Orr)
