Rough Week For Smart Grid Players (ITRI, DGII, COMV, ENOC, ELON)

Itron Inc. (NASDAQ: ITRI) is supposed to be one of the winners in the stimulus package.  The advanced metering company is known as the Smart Grid meter reader to many traders.  The company is involved in metering, data collection and utility software solutions for electric, water, and gas utilities, and it claims nearly 8,000 utilities worldwide as its customer base.  This is one of the companies deemed to be a winner under the Obama stimulus package.  Where this gets interesting is that Digi International (NASDAQ: DGII), Comverge, Inc. (NASDAQ: COMV), EnerNOC Inc. (NASDAQ:ENOC), and Echelon Corporation (NASDAQ: ELON) are all other smart grid plays and not large caps that have had a rough week in stock prices.

But this week has been a rough week for Itron.  Last Friday this closed at $63.17 and it closed out 2008 at  $63.74.  Shares closed at $58.04 yesterday.  Despite the market woes this week, the weakness here at Itron appears to be over worries of a delay in the company’s advanced metering infrastructure deployment.  We saw that this was due to software issues as a pact with San Diego Gas & Electric has fallen short of initial hopes in numbers of homes.  There are some security concerns in the software from what we have seen and been told, although to what extent is still in the air.

Pacific Crest cut earnings targets for 2009 over the last week and UBS downgraded the stock to Neutral earlier this month.  The company is set to report earnings next week on Wednesday, February 18.  Based upon what we have seen in many infrastructure support companies, it is no shock that traders have been selling this one ahead of earnings as so many are very cautious on even the “good” and “smart” capital expenditures being pushed down the road from utilities.

Just last week, Itron announced a collaboration with Digi International (NASDAQ: DGII) to enable utilities to remotely monitor and control distribution automation devices utilizing the OpenWay advanced metering infrastructure network by Itron.  DGII closed yesterday at $7.96, down from $8.65 last week and from a high this week of $8.89.

Comverge, Inc. (NASDAQ: COMV) is another player that is deemed to be a winner in the smart grid.  It is in the field of measuring peak and base load capacity for electric utilities and grid operators under the Smart Grid.  Its shares were at $5.57 last week and are trading at $5.25 this morning.

EnerNOC Inc. (NASDAQ:ENOC) provides demand response applications and joins up utilities and end users to work around peak load demand for many large customers. This can include automatically shutting down HVAC units, dimming street lighting and the starting of back up generators to smooth out the disturbance.  This stock closed out last week at $12.11, and even with a small gain this morning it is at $11.28.

Echelon Corporation (NASDAQ: ELON) is up this morning after the announcement that it joined The Demand Response and Smart Grid Coalition (DRSG).  Echelon is a pure-play for the grid stocks as it provides both an advanced metering system and networking technology to extend energy management applications into individual devices inside homes and businesses.  If it weren’t for a 5% gain because of a “Smart Grid” headline boosting it to $6.70 early on, it would have looked worse here too.  This was at $6.99 last Friday.

Jon C. Ogg
February 13, 2009