Can Energy Recovery Inc. (ERII) Overcome the Impact of the Iran War?

Energy Recovery, Inc. (NASDAQ:ERII) is one of the 8 Best Climate Change Stocks to Buy According to Analysts. Based on six analyst ratings compiled by CNN, 33% marked it Buy, while 67% rated it Hold. The stock has an average price target of $13, a 53.66% upside from the current price of $8.46.

On May 13, Seaport Research analyst Jeff Campbell reduced the price target on Energy Recovery to $12 from $16 while maintaining a Buy rating on the shares. The analyst attributed the lowered price target to uncertainty about the timing of its desalination mega-project due to the effects of the war in Iran.

In a letter to shareholders earlier this month, Energy Recovery President and CEO David Moon addressed the impact of the conflict in the Middle East as he announced that the company is withdrawing its guidance for the year and acknowledged that project delays are likely to occur. He added:

“With significant business tied to the Middle East, the war in Iran severely limits our near-term visibility, and as such, we are temporarily withdrawing our 2026 guidance until further notice. Above all else, our priority remains the safety and well-being of our employees in the region, and we are actively supporting our customers as they navigate this uncertainty. We believe this is only a temporary headwind and have experience growing through many geopolitical challenges during our 30-year history as a company.”

Moon added that the company’s desalination projects in countries exposed to the war represented approximately 40% of its original 2026 desalination guidance at the midpoint. Despite these headwinds, he emphasized that the company expects to generate significant free cash flow in 2026.

Energy Recovery (NASDAQ:ERII) designs and manufactures reliable, high-performance solutions that generate cost savings and reduce energy consumption for industries such as desalination & wastewater.

While we acknowledge the risk and potential of ERII as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ERII and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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