Itron Reports Q2 Miss and Cuts FY21 Guidance; Shares Crash 26.4%

Shares of Itron, Inc. (ITRI), an energy and water management company, plunged 26.4% to close at $71.84 on August 5. This price movement comes on the heels of the company’s disappointing Q2 results and bleak FY21 guidance, which was impacted by semiconductor shortages for components.

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In Q2, adjusted earnings of $0.28 per share jumped almost ten times year-over-year, but still fell short of analysts’ expectations of $0.48 per share. The company reported earnings of $0.03 per share in the prior-year period. (See Itron stock charts on TipRanks)

Additionally, revenues decreased 4% year-over-year to $489 million and lagged consensus estimates of $535.91 million. The decline in revenues reflected the negative impact of semiconductor shortages for components.

Reflecting a positive, gross margin jumped 340 basis points to 30.6%, versus 27.2% in the prior-year quarter. The margin improvement was caused by a favorable product mix as well as the reduced impact of manufacturing inefficiencies due to the COVID-19 pandemic.

Furthermore, the company reported a total backlog of $3.5 billion, compared to $2.9 billion reported a year ago.

However, due to the impact of component constraints, Itron lowered its FY21 guidance. The company forecasts adjusted earnings to be in the range of $1.00 to $1.50 per share, while the consensus estimate is $2.42 per share. Previously, the company expected earnings to range from $2.30 to $2.70 per share.

Additionally, revenues are expected to be in the range of $2.05 to $2.15 billion, versus the consensus estimate of $2.26 billion and the prior guidance range of $2.23 to $2.33 billion.

Following the disappointing results and guidance, Cowen & Co. analyst Jeff Osborne decreased the price target from $117 to $113 (57.3% upside potential) but reiterated a Buy rating.

Overall, the stock has a Strong Buy consensus rating based on 6 unanimous Buys. The average Itron price target of $112.60 implies 56.7% upside potential from current levels. Shares of ITRI have jumped 7% over the past year.