J.P Morgan Comments On EnerNOC Following Disappointing Outlook; Lowers PT

EnerNOC ENOC reported results slightly below expectations for the seasonally weak 4Q. 2011 guidance was below expectations and the initial outlook for 2012 points to slower than expected growth. Despite known decreases in PJM pricing in 2011/12, non-PJM pricing appears to be weaker than expected. That said, the initial 2013 outlook improves as expected with a strong contribution from EMS. Management defended its PJM business against the recent "double-counting" concerns and quantified any impact to 2011, if the PJM rules do change unexpectedly, to 5-10% of sales, lower than some investors had estimated. The potential impact to 2012 and beyond would be even less, alleviating this risk somewhat. J.P Morgan is lowering its FY11 and FY12 estimates to guidance. ENOC expects FY11 GAAP EPS of $0.25-$0.50 on $300-320mm in revenue. Despite known price declines in PJM, non-PJM related pricing appears to be weaker than expected. Management stated that the reduction is primarily due to a change in the NE-ISO contract and that 2011 is likely the trough year. J.P Morgan has an Overweight rating and lowers its PT on ENOC from $44.50 to $32.50 ENOC closed Wednesday at $19.30