On Friday, BMO Capital Markets adjusted its outlook on Bloom Energy Corp . (NYSE:BE) shares, raising the price target to $19.50 from the previous $12.00 while keeping a Market Perform rating on the shares. The adjustment follows the announcement of an agreement between Bloom Energy and American Electric Power (NASDAQ:AEP) to supply up to 1.0 gigawatts of Bloom's solid oxide fuel cell stationary power solution for AEP's commercial and industrial customers.
The analyst from BMO Capital expressed enthusiasm reminiscent of a "Back to the Future" moment upon hearing the initial headlines of the deal. The firm anticipates a very positive reaction from Bloom Energy's stock in response to the news. In light of the agreement, BMO Capital has increased its projections for Bloom Energy beyond 2025, which prompted the hike in the price target to the new $19.50 level.
Despite the upbeat adjustment in the price target, BMO Capital maintains a cautious stance with a Market Perform rating. The firm cites several uncertainties regarding the transaction that support their "wait and see" approach. These uncertainties have not been detailed, but they are significant enough to prevent an upgrade in the stock's rating at this time.
The deal between Bloom Energy and AEP represents a significant sales opportunity for Bloom Energy's fuel cell technology. The agreement to purchase up to 1.0 gigawatts of power is a substantial commitment and showcases the growing interest in alternative energy solutions in the commercial and industrial sectors.
The price target increase reflects BMO Capital's revised expectations for Bloom Energy's financial performance and market position following the AEP deal. While the news is favorable, BMO Capital's stance suggests that investors should be aware of potential risks associated with the transaction as it unfolds.
In other recent news, Bloom Energy has seen a flurry of activity. Financial services firm Piper Sandler upgraded Bloom Energy's stock rating from Neutral to Overweight and doubled the price target to $20.00. This decision followed Bloom Energy's agreement with a large utility, potentially worth around $3.0 billion for equipment alone.
The analyst from Piper Sandler believes that this deal could pave the way for similar future agreements and may result in higher estimates for the company in 2025 and beyond.
In the recent quarterly earnings, Bloom Energy reported revenues of $330 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of $21 million. Despite falling short of Susquehanna Financial Group's expectations, the company maintained its full-year revenue and gross margin forecasts, indicating a potential increase in deliveries and margins for the next quarter.
Bloom Energy also announced securing three new orders, including an 80 megawatt project in South Korea, signaling an ongoing effort to expand its global footprint in the fuel cell industry.
Furthermore, Bloom Energy is increasing its manufacturing capacity in Fremont, in response to anticipated demand. The company projects full-year revenue between $1.4 to $1.6 billion and a non-GAAP operating income of $75 to $100 million, ending the quarter with a strong cash position of $549 million. With these recent developments, investors will be keenly watching the fourth quarter results to see if Bloom Energy can deliver on its promises.
InvestingPro Insights
The recent deal between Bloom Energy and American Electric Power has caught the attention of analysts, and InvestingPro data provides additional context to this development. Despite the company's recent revenue decline of 12.56% over the last twelve months, InvestingPro Tips suggest that net income is expected to grow this year, aligning with the positive outlook stemming from the AEP agreement. This expectation is further supported by the fact that 10 analysts have revised their earnings upwards for the upcoming period.
InvestingPro data shows Bloom Energy's market capitalization at $3.04 billion, with a price-to-book ratio of 7.04, indicating that the stock is trading at a premium to its book value. This high valuation could be reflective of the market's optimism about the company's future prospects, including the potential impact of the AEP deal.
It's worth noting that while Bloom Energy has not been profitable over the last twelve months, with a negative P/E ratio of -25.37, InvestingPro Tips indicate that analysts predict the company will be profitable this year. This projection aligns with BMO Capital's increased price target and the potential revenue boost from the AEP agreement.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 5 more InvestingPro Tips available for Bloom Energy, which could provide valuable context for understanding the company's financial health and market position in light of recent developments.
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