SAN FRANCISCO, Feb. 10, 2012 /PRNewswire/ -- Merriman Capital, Inc., a wholly owned subsidiary of Merriman Holdings, Inc. (OTCQX: MERR), initiated equity research coverage on Enova Systems, Inc. (NYSE-AMEX: ENA) ($0.39) on February 8, 2012 with a Buy rating.
Enova Systems is a clean technology company that focuses on the production and marketing of power management and conversion systems for the automotive industry.
Research analyst, Jesse Herrick, highlighted these themes in his initiation report:
- Green for Free (GFF) program will be a game-changer for Enova and the step van market. Enova formed an alliance with FCCC in November 2011 to initiate the GFF program under which FCCC's All-Electric Step Van chassis will be powered by Enova's Omni drive system. FCCC has a 90% market share of the U.S. and Canadian diesel-driven medium-duty commercial vehicle space with customers including UPS, FedEx, Cintas, and Aramark available to provide a ready market for the GFF program.
- Omni drive systems will put Enova on a different growth trajectory. Enova's Omni drive systems, which are compatible with a wide range of vehicle drive systems, are expected to generate more than 45% gross margins, boosting the overall gross margin of Enova to more than 35%. The Omni product line is comprised of the Omni Inverter, the Omni Charger, and the Omni DC/DC Converter.
- Enova has been steadily building up a customer portfolio. Enova was the first company to market a commercial PHEV, in 2006, and has successfully delivered more than 2,500 hybrid and electric systems globally, steadily building up its customer portfolio. The company has established relationships with some of the strongest brands in the automobile manufacturing industry, including Navistar, Smith Electric Vehicles, China-based First Auto Works (FAW), and Daimler Freightliner.
- Attractive valuation. We have arrived at a 12-month price target of $0.71 for Enova using average peer EV/Sales multiples, implying considerable upside from current levels. We feel that the GFF program will boost Enova's revenue in 2012 and 2013, through a combination of fresh orders, new customers, and preservation of existing relationships.
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