Our investment thesis for Hammond Power Solutions (TSX: HPS.A) is that the company’s market position allows for continued +2x industry growth via US distributors in the near term, with further upside as a preferred upstream supplier to clean-energy grid investment.
As expected, the 4Q20 results reflected the near-term challenges of Covid with deferred bookings and a price realization focus to address rising input costs. We expect the same for 1H21 with a bigger input cost affect on margins in 2Q21, followed by improvements in 2H21. We are maintaining revenue estimates, though trimming overall margins for 2021.