Jefferies Lowers Price Target for Energy Recovery (ERII)

Energy Recovery Inc. ERII is a pioneer in the fast-growing market for seawater reverse osmosis. The company also provides a pure play on desalination. In Q1, Energy Recovery (ERII) lost an Israeli bid to Flowserve FLS. The company has recently acquired PEI, and the acquisition is likely to boost the company’s position in smaller projects with roughly double the addressable opportunity. The company is also looking to launch its ceramic facility in the second half of this year. Energy Recovery believes that it can achieve 80%-plus yields at its facility. Jefferies & Co. has given a “Hold” rating to the stock and has lowered its price target to $4.40, which reflects 8x 2012E EBITDA. The company may face risks in the form of cyclical markets and a tighter credit situation.