On Friday, Piper Sandler, a financial services firm, elevated the stock rating of Bloom Energy Corp . (NYSE:NYSE:BE) from Neutral to Overweight. The firm also doubled the price target for Bloom Energy shares to $20.00, a significant increase from the previous target of $10.00.
This upgrade follows the announcement of Bloom Energy's agreement with a large utility, which the analyst believes could be worth approximately $3.0 billion for equipment alone.
The analyst from Piper Sandler expressed optimism about Bloom Energy's recent deal, suggesting that it demonstrates the viability of the company's products for powering large-scale data centers. This could potentially pave the way for similar future agreements with other utilities.
The analyst anticipates that with the likelihood of higher estimates for the company in 2025 and beyond, Bloom Energy's market valuation should adjust accordingly.
The firm's analysis indicates that Bloom Energy stands to benefit from the growing demand for data center equipment, a sector where companies are valued at roughly 20 times the Street's earnings estimates for the years 2025 and 2026. The analyst pointed out that Bloom Energy is directly leveraged to load growth and has the capability to provide onsite power quickly.
Furthermore, the firm noted that Bloom Energy is less exposed to risks associated with the Inflation Reduction Act (IRA) tax credits, as the fuel cell Investment Tax Credit ( ITC (NS:ITC)) is set to expire at the end of 2024. T
his positions Bloom Energy favorably in comparison to other companies covered by Piper Sandler. The new price target of $20.00 per share reflects the firm's confidence in Bloom Energy's performance and prospects.
In other recent news, Bloom Energy Corporation has been the subject of significant developments. The company reported third-quarter revenues of $330 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of $21 million. However, these figures fell short of Susquehanna Financial Group's expectations, which had projected revenues of $364 million and EBITDA of $33 million.
Despite this, Bloom Energy upheld its full-year revenue and gross margin forecasts, suggesting a substantial increase in deliveries and margins for the fourth quarter.
The company also announced securing three new orders, including an 80 megawatt project in South Korea, set to become the world's largest single-site fuel cell installation. This, coupled with the company's active pursuit of large-scale orders, indicates an ongoing effort to expand its global footprint in the fuel cell industry.
Susquehanna maintained its positive stance on Bloom Energy, increasing the stock's price target from $13.00 to $16.00, reflecting confidence in the company's market position and growth potential.
Bloom Energy's recent developments also include an anticipated increase in manufacturing capacity in Fremont, in response to expected 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.
As these developments unfold, investors will be keenly watching the fourth quarter results to see if Bloom Energy can deliver on its promises.
InvestingPro Insights
Complementing Piper Sandler's optimistic outlook on Bloom Energy Corp. (NYSE:BE), recent data from InvestingPro provides additional context to the company's financial position and market performance. Despite the company not being profitable over the last twelve months, InvestingPro Tips indicate that net income is expected to grow this year, and analysts predict the company will be profitable this year. This aligns with Piper Sandler's expectations of higher estimates for 2025 and beyond.
The company's stock has shown a strong return over the last month, with InvestingPro data revealing a 26.96% price total return. This recent performance may reflect the market's positive reaction to the large utility deal mentioned in the article. Additionally, Bloom Energy's liquid assets exceeding short-term obligations suggest a solid financial foundation to support its growth initiatives, particularly in the data center equipment sector.
It's worth noting that Bloom Energy's stock price movements are quite volatile, which investors should consider alongside the potential upside highlighted by Piper Sandler. For a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into Bloom Energy's investment potential.
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