Itron (NASDAQ: ITRI) is one of the leading global suppliers of meters and meter communication systems.
The technology company’s diverse offerings include industrial Internet of Things (IIoT) to support the operations of critical operations and infrastructure.
Partnerships Aid Growth
The company’s focus on the expansion of its global footprint with key partnerships is boosting its growth. Earlier this week, it partnered with CenterPoint Energy.
Per terms of the partnership, Itron will provide 3 million Itron Intelis natural gas ultrasonic smart meters to CenterPoint’s natural gas distribution system. Itron’s natural gas system will enable better safety and reliability at CenterPoint’s utilities while reducing vehicle carbon emissions.
In March, Itron and Emerson joined hands to improve grid reliability and sustainability in the utilities sector. Among other things, the alliance will enable a cost-efficient management of air conditioning across a service territory.
Partnerships like these are expanding the company’s customer base which is important for long-term sustainable growth.
Headwinds to Persist
Like other peers in the market, Itron has not been safe from the current component supply constraints. Despite customer demand being robust, the pressure of supply issues is offsetting top-line gains.
This was reflected in the last reported quarter’s performance, where the company recorded a 7.5% year-over-year revenue decline. Incidentally, Itron does not expect these headwinds to start subsiding till the second half of 2022.
Itron’s highly leveraged balance sheet is another cause of concern, which can come in the way of its investments towards technological innovations and other growth initiatives. Leverage of this level can restrict cash flow and may prevent refinancing deals at reasonable rates.
At the end of 2021, the company’s cash and cash equivalents came at $162.6 million. Long-term debt stood at $450.2 million.
ITRI stock’s performance has not been too encouraging, losing 44.4% of its value over the past year.
Experts Cautiously Optimistic
In November last year, Piper Sandler analyst Pearce Hammond downgraded Itron to Hold from Buy, with a price target of $84.
Overall, Wall Street is treading cautiously with Itron, with a Moderate Buy consensus estimate based on four Buys and three Holds. The average ITRI price target is $65.43.
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