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.

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.