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Investing.com - BofA Securities raised its price target on Bloom Energy Corp. (NYSE:BE) to $39.00 from $26.00 on Tuesday, while maintaining an Underperform rating on the stock. The current share price of $95.56 represents a significant premium to InvestingPro’s Fair Value assessment, suggesting the stock is substantially overvalued despite its impressive 330% year-to-date return.
The firm acknowledged improved execution at Bloom Energy that led to revised estimates, but expressed concerns about consensus revenue expectations and limited upside potential at current valuation levels. These valuation concerns appear justified, as the company trades at an extraordinary P/E ratio of 1,440 and an EV/EBITDA multiple of 166.7.
BofA Securities now assumes approximately 40% megawatt compound annual growth rate through 2028, reflecting increased demand for Bloom Energy’s products. This aligns with the company’s strong revenue growth of 44.5% over the last twelve months and analysts’ expectations for 27% revenue growth in the current fiscal year.
The firm’s analysis indicates that sustaining this growth trajectory beyond 2027 would require a significant increase in new awards, which introduces material execution risk for the company. While Bloom Energy operates with a moderate debt level and maintains strong liquidity with a current ratio of 4.4, execution challenges remain.
At 25x/16x consensus 2027/2028 EBITDA, BofA Securities continues to see a negative risk/reward profile and identified fourth-quarter backlog metrics as the next key catalyst to validate what it describes as "muted order activity versus splashy headlines." InvestingPro data shows Bloom Energy has 20+ additional insights available, including tips on the company’s financial health, growth prospects, and valuation metrics that could help investors make more informed decisions about this volatile stock.
In other recent news, Bloom Energy Corporation announced the pricing of $2.2 billion in convertible senior notes due in 2030, an increase from the initially planned $1.75 billion. The company has granted initial purchasers the option to buy an additional $300 million in notes. The zero-interest notes will mature on November 15, 2030, with settlement expected on November 4, 2025. Additionally, Bloom Energy is in discussions for a potential $600 million revolving credit facility, though no agreements have been finalized. This proposed facility is expected to include covenants that may limit the company’s financial actions. Jefferies has raised its price target for Bloom Energy to $53 from $31, citing a recent BAM deal. However, Jefferies maintains an Underperform rating, expressing hesitation about the profitability of the joint venture. These developments highlight Bloom Energy’s active financial strategies and ongoing market evaluations.
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