Piper Jaffray Lowers Estimates & PT On EnerNOC

Piper Jaffray recommends approaching EnerNOC ENOC shares with caution into the company's 4Q earnings release on February 16th. Piper is comfortable with its 4Q estimates but is concerned that FY11 guidance could fall shy of consensus as the company ramps investment to support longer term revenue growth. It is lowering its FY11 EPS estimate to $0.60 and setting FY12 EPS at $0.90. Piper Jaffray remains comfortable with its 4Q sales and EPS estimates, which are in-line with management guidance. However, it expects the company will set a more conservative bar for 2011, incorporating a higher level of sales & marketing investment to support longer-term growth. Piper is also forecasting gross margins to contract by approximately 80bps in FY11. Piper believes pricing in the upcoming PJM auction could be cleared with a y/y decline which would weigh on ENOC shares. Piper Jaffray is maintaining its Neutral rating on ENOC shares, but would caution that in the next four months the stock could face additional headwinds that would present a more attractive entry point. Its price target is moving to $27 from $32. ENOC is trading higher at $24.30