Lazard’s Strong Defense of Capstone Turbine (CPST)

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If you trade small-cap alternative energy (or less-brown energy stocks), then Capstone Turbine Corp. (NASDAQ: CPST) has likely come across your desk.  Despite a recent pounding with a 35% pullback, shares are still up nearly 200% from last year’s lows.

We noticed a severe volume alert yesterday morning at Volume Spike which appears to be twofold with a market drop and lower energy prices and on what may have been an institution lightening up on its shares.

Today we have Lazard Capital Markets’ analyst Sanjay Shrestha coming tothe defense of Capstone Turbine.  Shrestha notes that yesterday’s (andrecent days) sell-off on macro events alone with a volatile energymarket gives an opportunity for new funds to get into the stock. 

He further notes, "Capstone remains an attractive way to invest inthe expected growth of the distributed generation market as the companycontinues to build backlog and execute on its long-term growth strategyof achieving cash flow break-even in the near term."

The report calls for increasing order momentum from its target marketsand recent order traction that should increase its backlog. It alsoexpects continued order announcements from a diverse set of customers.

Shrestha is reiterating his "BUY" rating and is also reaffirming his$6.00 price target. Before thinking this is only defending a droppedcall, understand that he’s been recommending this stock since it wasunder $1.50 per share.

Shares are indicated up by less than 2% at $2.95 pre-market on very thin volume so far.

Jon C. Ogg
July 25, 2008

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