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Consolidated Water (NASDAQ:CWCO) +9.7% in Wednesday’s trading after announcing final contract terms for its Hawaii desalination project with a total contract value of $204M.
Following the news, Janney upgraded the stock to Buy from Neutral with a $24 price target, hiked from $19, saying the contract represents the first U.S. desalination plant for Consolidated Water (CWCO) and should provide a springboard for other U.S.-based opportunities.
Given the 44-month timeline and the total size of the Hawaii contract, Janney analyst Michael Gaugler said a higher level of earnings should continue onward for the next several years, providing the company with plenty of time to set a new, higher baseline for the future.
“Our view is that investors will pay a higher P/E multiple for what is likely to be an elevated sustainable earnings stream, and we’ve raised our P/E multiple assumption from 19x to 22x to reflect that opinion,” Gaugler wrote.
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