Maxwell Builds Order Book

Maxwell Technologies Inc. (MXWL - Analyst Report) announced that it has received a cost-shared technology development contract worth approximately $7 million from the United States Advanced Battery Consortium LLC (“USABC”).

Maxwell Technologies will develop and integrate technologies with advanced energy storage system for power-assist hybrid electric vehicles (PAHEVs). Under the contract, the company will also be responsible for capacitor technology development, module technology and design, electrode formulation and system integration of PAHEVs.

In order to manage costs, USABC will provide low-cost, high performance separator membrane and electrolyte specifically developed for the program. Overall, USABC will provide $3.5 million that includes payments to technology development partners over the course of the 2-year program.

Earlier, in February 2011, the company reported fourth quarter 2010 adjusted earnings of 4 cents per share, missing the Zacks Consensus Estimate of 5 cents. The company had cash and cash equivalents of $39.8 million at the end of 2010 compared with $29.6 million at the end of 2009. Going forward, the Zacks Consensus Estimates for first quarter 2011 and fiscal year 2011 are currently at 5 cents per share and 36 cents per share, respectively.

Looking ahead, the company would see strong demand for its products related to utility infrastructure, renewable energy, public transportation and space programs. Additionally, its key end-markets appear to benefit from government stimulus programs as well as more stringent automotive emissions legislation.

However, in the near term, downside risks include the rate of penetration for ultracapacitor technology into broader markets, a higher cost structure for ultracapacitor production, R&D overheads and earnings dilutive equity issuances.

Maxwell Technologies presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to focus on the Zacks #1 Rank (short-term Strong Buy rating) peers like Multi-Fineline Electronix Inc. (MFLX - Snapshot Report) and Ceradyne Inc. (CRDN - Snapshot Report).

Based in San Diego, California, Maxwell is a leading developer and manufacturer of innovative, cost-effective energy storage and power delivery solutions. It develops, manufactures and markets energy storage and power delivery products for transportation, industrial telecommunications and other applications and microelectronic products for space and satellite applications.

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