Maxwell Gets Swiss Funding

Maxwell Technologies Inc. ( MXWL - Analyst Report ) announced that it will receive approximately $0.6 million from the Swiss government to accelerate the company's initiatives to improve manufacturing processes and enhance performance of its proprietary CONDIS high-voltage capacitor products. CONDIS is used in electric utility grid infrastructure and other high-voltage applications.

The funding provided by the Commission for Technology and Innovation of the Swiss Federal Department of Economic Affairs would support Maxwell’s collaborative dielectric material development program with the Swiss Federal Laboratories for Materials Science and Technology. The 30-month program will commence on March 1, 2012.

CONDIS capacitor products perform reliably for decades in dead tank, live tank and other high voltage circuit breaker and transformer applications. CONDIS capacitive voltage dividers (CVD) are used to measure voltage and power levels in overhead transmission lines.

Maxwell announced in February 2011 that its CVD products had been designed into thousands of capacitive voltage transformers that will be installed over the next several years as part of a multi-billion-dollar renovation of Russia's electric utility grid.

Maxwell Technologies is a leading manufacturer of ultracapacitors, high-voltage capacitors and microelectronics products. Looking ahead, the company’s products are sure to experience strong demand growth related to the utility infrastructure, renewable energy, public transportation, and space programs. Particularly the company’s key end markets appear likely to benefit from government stimulus programs as well as more stringent automotive emissions legislation.

The European Union has taken the lead in enacting legislation requiring carbon dioxide emission reduction targets and has leveled penalties on vehicles whose emissions exceed the mandated limit. In the U.S., the Obama administration is focused on increasing federal investments in greener transportation technologies through laws like the Corporate Average Fuel Economy (CAFE) standards for U.S. automakers.

In the near term, growth for Maxwell Technologies will be powered by sales of ultracapacitors to support efficient, cost-effective energy storage for recuperative braking systems in low-emission, hybrid electric transit buses and zero-emission electric rail vehicles. The Chinese government is actively funding development and production of hybrid and electric public transit vehicles. Maxwell is actively tapping the market through a series of orders from Chinese hybrid bus original equipment manufacturers.

However, we are cautious about the predominantly ultracapacitors based revenue model of the company and maintain a Neutral rating on energy storage pure-play player, Maxwell Technologies. Currently, it has a short-term Zacks #3 Rank (Hold) on the stock. Thus we would advise investors to prefer its Zacks #2 Rank (Buy) peers like Sparton Corporation ( SPA - Snapshot Report ) and Stoneridge Inc. ( SRI - Snapshot Report ) , for accumulation in the near term.