Echelon's New CEO And Strong Quarter Elicit Strong Future

Deutsche Bank has published a research report on Echelon Corporation ELON and starts looking towards the future with Echelon's guidance estimates. In the report, Deutsche Bank writes "Echelon reported 3Q GAAP EPS of -$0.19 ($0.01 above DB and the Street; guidance was -$0.23 to -$0.20). Sales of $27mln were in-line with our / Street's estimate (slightly weaker Utility products sales – formerly NES, were offset by stronger than expected Commercial products sales – formerly LWI - as strength in building related orders continued). The upside came from better than expected gross margin (46%; beat our estimate by 160bps; higher margin sales to EU utility customer) and lower than expected operating expenses (opex:sales 370bps below our estimate; timing variances; some expenses shifted to 4Q10). ELON generated FCF of $2mln in the Q." Deutsche Bank maintains its Hold rating and $7 price target. Echelon closed yesterday at $7.98.