On Monday, Chardan Capital Markets adjusted its stance on Energy Vault Holdings Inc. (NYSE: NYSE:NRGV), shifting from a Buy to a Sell rating. The firm also significantly decreased the share price target to $0.75 from the previous $7.00. The revision comes as analysts anticipate a sizable drop in Street estimates following recent quarterly reports and ahead of the company's upcoming analyst day.
The downgrade was prompted by expectations of a sharp decline in consensus estimates for Energy Vault. Chardan Capital Markets predicts that the Street's current consensus revenue estimate of $335 million will fall by approximately 65% to around $118 million within the next 30 days. The firm noted that this anticipated revision could pose a substantial negative impact on the stock's performance.
The analyst from Chardan Capital Markets highlighted that confusion among sell-side estimates is prevalent after the company's quarterly report. This confusion is expected to lead to lowered first-quarter estimates and a significant reduction in the outlook for the full year 2024, which could result in an inverted revenue trajectory for Energy Vault this year.
Chardan's analysis suggests that the consensus, which excludes three estimates projecting over $550 million, will likely be adjusted downwards. The firm views the impending estimate revisions as a meaningful negative catalyst for Energy Vault shares, indicating a potential underperformance relative to the group as consensus figures are adjusted.
The update comes as the market prepares for Energy Vault's analyst day next month, where more detailed information and guidance may be provided. The current sentiment from Chardan Capital Markets is that the stock may struggle in comparison to its peers due to the expected downward revisions in revenue estimates.
InvestingPro Insights
In light of Chardan Capital Markets' recent downgrade of Energy Vault Holdings Inc. (NYSE: NRGV), a glance at the company's financial health and market performance through InvestingPro data may provide additional context for investors. Energy Vault's market capitalization stands at $254.45 million, which reflects the market's current valuation of the company. Despite a substantial revenue growth of over 134% in the last twelve months as of Q1 2023, the company's gross profit margin remains low at 5.13%, underscoring the concerns raised about its profitability. The stock's performance has also been under pressure, with a price total return of -13.07% over the last month, aligning with the bearish outlook from analysts.
Two InvestingPro Tips that investors might find pertinent in this situation are: Energy Vault holds more cash than debt on its balance sheet, which could provide some financial flexibility in the short term. However, the company is quickly burning through cash, which raises concerns about its sustainability and may contribute to the negative sentiment. With Energy Vault not expected to be profitable this year and suffering from weak gross profit margins, these insights could be crucial for investors evaluating the company's prospects.
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