Energy Recovery (NASDAQ: ERII) saw its stock price plummet 12.22% in pre-market trading on Thursday, extending its losses following a significant 11.18% decline during Wednesday's regular trading session. The sharp downturn comes in the wake of the company's disappointing third-quarter earnings report, which revealed mixed results and raised concerns among investors about the company's near-term prospects.

For the quarter ended September 30, Energy Recovery reported revenue of $32 million, marking a 17% decrease year-over-year and falling short of analyst estimates of $32.93 million. While the industrial fluid flow technology specialist managed to beat earnings expectations with an adjusted earnings per share (EPS) of $0.12, surpassing the $0.10 estimate, other financial metrics painted a less rosy picture. Net income for the quarter decreased by 54% year-over-year to $3.9 million, and the gross margin slightly declined to 64.2% from 65.1% in the previous year.

The market's negative reaction to the earnings report reflects growing investor concerns about Energy Recovery's revenue trajectory and potential continued pressure on margins. The company attributed the disappointing figures to factors such as the timing of revenue from contracted projects, product mix issues, and the impact of tariffs. Despite management's assurance that the results aligned with internal expectations, the ongoing stock slide suggests that investors remain skeptical about the company's ability to navigate current challenges in its operating environment. In light of these developments, B. Riley adjusted its stance on Energy Recovery, initially reported as lowering the target price to $14 from $16, but later corrected to raising the target price to $16 from $14, adding another layer of complexity to the market's assessment of the stock.