Why Maxwell Technologies (MXWL) Is Soaring on Wednesday

NEW YORK (TheStreet) -- Maxwell Technologies (MXWL) is soaring on Wednesday after Piper Jaffray reiterated the stock as "overweight" and nearly doubled its price target to $21 from $11.

By midafternoon, shares had added 19.1% to $14.56.

Piper Jaffray revisited the company's ratings valuation after receiving queries as to Maxwell's recent share price strength. Prior to Wednesday, shares had climbed nearly 40% within two weeks.

"Though we cannot trace the performance to any one catalyst, after hosting an NDR with MXWL last week we do believe the strength is justified," analyst Alexander Potter said in a note. "The interim CEO [John Warwick] spoke directly re: the potential for near-term design wins in the automotive market - which is at least a $1.5B annual opportunity for MXWL (and probably much more)."

Potter also said "Elon Musk's affinity for ultra-capacitors" could result in a partnership with Tesla (TSLA).

"As order momentum builds, we believe investors are likely to begin assigning a higher multiple to MXWL shares. There is historical precedent for this occurring: for all of 2011 and some of 2012, MXWL traded at or above 3x forward revenue. We think the stock is about to revisit this valuation," he said.

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TheStreet Ratings team rates MAXWELL TECHNOLOGIES INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate MAXWELL TECHNOLOGIES INC (MXWL) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MXWL's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.37, which illustrates the ability to avoid short-term cash problems.
  • 43.07% is the gross profit margin for MAXWELL TECHNOLOGIES INC which we consider to be strong. Regardless of MXWL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MXWL's net profit margin of -7.21% significantly underperformed when compared to the industry average.
  • MAXWELL TECHNOLOGIES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MAXWELL TECHNOLOGIES INC reported lower earnings of $0.22 versus $0.25 in the prior year. For the next year, the market is expecting a contraction of 54.5% in earnings ($0.10 versus $0.22).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 198.2% when compared to the same quarter one year ago, falling from $2.87 million to -$2.81 million.

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