BMO cuts Bloom Energy stock target to $23 on mixed outlook

On Friday, BMO Capital Markets adjusted its stance on Bloom Energy Corp . (NYSE:BE), reducing the company’s price target from $25.00 to $23.00 while keeping a Market Perform rating on the stock. The adjustment follows Bloom Energy’s year-end 2024 call, which presented a combination of positive and less encouraging indicators for the company’s future performance. According to InvestingPro data, the stock currently appears overvalued, with a market capitalization of $5.3 billion and a high Price/Book multiple of 12.25.

Stifel analysts highlighted Bloom Energy’s stronger-than-anticipated guidance for fiscal year 2025 revenue and gross margins, which could signal sustained momentum. While the company’s current gross profit margin stands at 21.56% and analysts expect positive earnings of $0.12 per share in 2024, the lack of backlog growth, even when accounting for changes in reporting, seems to contradict the company’s statements regarding demand from data centers. This discrepancy is a point of concern for BMO Capital.

Moreover, Bloom Energy’s operating margin came in slightly below expectations, with an EBITDA of -$34.68 million in the last twelve months, which could restrict the possibility of upward revisions to the company’s forecasts. This aspect of the financial outlook played a role in the decision to adjust the price target for Bloom Energy shares. For deeper insights into Bloom Energy’s financial health and additional analysis, check out the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks.

The analysts at BMO Capital expressed disappointment with Bloom Energy’s decision to discontinue providing detailed data on volumes and average selling prices (ASP). This lack of transparency could make it more challenging for investors and analysts to gauge the company’s performance and market position accurately.

In summary, while Bloom Energy’s guidance for the next fiscal year may be seen as a positive sign by some investors, concerns about backlog growth and operating margins, coupled with reduced data disclosure, have led BMO Capital to adopt a cautious outlook and adjust the price target accordingly.

In other recent news, Bloom Energy reported impressive financial results for the fourth quarter of 2024, significantly exceeding market expectations. The company achieved an earnings per share (EPS) of $0.43, surpassing the forecasted $0.29, and generated revenue of $572.4 million, well above the anticipated $507.36 million. For the full year, Bloom Energy recorded a revenue of $1.47 billion, marking a 10.5% increase from 2023. Looking ahead, the company projects revenue growth of nearly 20% for 2025, supported by strong demand for its energy servers.

Piper Sandler has adjusted its price target for Bloom Energy shares, lowering it to $31 from $33, while maintaining an Overweight rating. The revision reflects operational leverage concerns, despite Bloom’s strong start to 2025 and revenue projections that are 4% higher than Wall Street estimates. Meanwhile, KeyBanc Capital Markets maintained a Sector Weight rating on Bloom Energy, noting the company’s solid performance in line with its guidance.

Bloom Energy’s order book includes a secured 100 megawatts from a 1 gigawatt order by American Electric Power (NASDAQ:AEP), with expectations of additional customer interest due to the company’s rapid deployment capabilities. Additionally, Bloom Energy is in discussions with other utilities for agreements similar to the one with American Electric Power. These developments suggest a robust foundation for Bloom Energy’s growth as it continues to expand its operations in response to increasing demand.

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