Seaport downgrades Energy Recovery stock over Middle East risks

Published on 10/05/2026 at 03:53 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWS

Seaport cut the rating from Buy to Neutral on September 14, 2026. Energy Recovery stock reported USD 12.00 million revenue, 34.64 percent below estimates.

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Seaport Research Partners downgraded Energy Recovery stock from Buy to Neutral on September 14, 2026, citing operating risks linked to the Middle East, according to MarketBeat. The change followed Energy Recovery's second-quarter results, which showed weaker project timing and a sharp revenue decline.

Revenue misses by USD 6.36 million

Energy Recovery reported USD 12.00 million of revenue for the second quarter of 2026, down 57.20 percent from USD 28.05 million in the year-ago quarter, according to Zacks. The figure also came in 34.64 percent below the USD 18.36 million consensus estimate, making the revenue shortfall the clearest pressure point in the latest report.

The adjusted loss was USD 0.03 per share in the second quarter, compared with a USD 0.04 consensus loss, while GAAP diluted loss reached USD 0.06 per share. The company had a USD 3.20 million GAAP net loss for the quarter, compared with USD 2.10 million of net income in the second quarter of 2025, according to The Globe and Mail.

Backlog offers longer-term support

Management reported a USD 27.00 million megaproject backlog during the August 5, 2026 earnings call, but also described timing as uncertain because financing, procurement and logistics delays were affecting large desalination projects. That distinction matters: backlog can support future revenue visibility, yet it does not determine when projects convert into reported sales.

Desalination revenue was USD 11.50 million in the second quarter, down from USD 25.50 million a year earlier, while megaproject revenue fell 82.00 percent to USD 2.70 million from USD 14.80 million. Energy Recovery also guided to USD 3.00 million to USD 6.00 million of capital expenditures for full-year 2026, focused on its Saudi Arabia facility and California operations.

Market value reflects the reset

Energy Recovery had a market capitalization of USD 349.0 million as of October 2, 2026, with a 52-week range of USD 6.60 to USD 18.32. The company listed USD 61.4 million in cash at June 30, 2026, while operating cash flow reached USD 16.3 million in the second quarter.