Moody’s Investor Services raised various debt ratings and its outlook for Itron Inc. (ITRI), an electric grid technology provider, on the basis of its strong operating results last year and credit profile.
Itron’s corporate family and probability for default ratings were elevated to “Ba2” from “Ba3” by Moody’s. The ratings are the second and the third highest levels of non-investment grade debt, respectively.
The firm also upgraded its ratings on the company’s senior secured bonds to “Ba1” from “Ba2”, which is the highest non-investment grade. As suggested by Moody’s these ratings apply to approximately $700 million of debt.
The firm also assigned a speculative-grade liquidity rating of “SGL-2″ to indicate company’s liquidity. Apart from the ratings the firm also raised its outlook to “stable” from “positive”.
The company registered a profit of $104.8 million during 2010 compared with a loss of $2.2 million during 2009. The positive performance can be ascribed to the several Advanced Metering Infrastructure contracts that led to the increase in shipments of smart meters and modules in North America.
The firm is quite hopeful that these contracts will continue to drive the company’s results in the coming quarters. However, the firm also expects a modest decline in the company’s revenue compared with the levels in 2010, due to the slowdown in government initiatives.
According to the firm, spending cycles of utilities, the possibility of delays in the implementation of smart metering, rising commodity costs and competition from new rivals are threats that may impede its growth prospects, but considering Itron’s strong global leadership among metering companies, competitive position and healthy degree of recurring replacement revenue, the firm is positive.
We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.
Itron is a leading technology provider to the global energy and water industries. It is the world’s leading provider of intelligent metering, data collection and utility software solutions, with nearly 8,000 utilities worldwide relying on its technology to optimize the delivery and use of energy and water. Itron competes with General Electric Co. (GE), Roper Industries Inc. (ROP) and Schneider Electric SA.
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