U.S. stocks edge higher; solid earnings season continues
On Tuesday, BMO Capital Markets adjusted its outlook on Fluence Energy Inc. (NASDAQ:FLNC) by reducing the price target from $25.00 to $22.00, while still recommending the stock as an Outperform. The adjustment comes in the wake of a recent incident at the company's Moss Landing site, which has added a layer of uncertainty to Fluence Energy's business prospects. The stock, currently trading at $14.42, has experienced a notable 10.6% decline over the past week, according to InvestingPro data, which also indicates the stock is trading below its Fair Value.
The firm's analysis acknowledges the challenges faced by Fluence Energy, including a fire at one of its key sites. Despite this setback, BMO Capital highlights the company's robust revenue growth, which is projected to outstrip the broader clean energy sector. This aligns with InvestingPro data showing strong revenue growth of 21.7% over the last twelve months and a projected 47% growth for fiscal year 2025. BMO estimates a 43% increase in revenue for Fluence Energy, which it finds compelling given the stock's attractive valuation at 6.6 times the firm's 2026 EBITDA forecast.
Investor attention is currently centered on the potential downside risks to Fluence Energy's fiscal year 2025 revenue guidance, which has a midpoint of $4 billion and is heavily weighted towards the second half of the year. The focus for the upcoming first quarter 2025 earnings call is expected to be on the company's bookings and backlog coverage. BMO anticipates that the update from Fluence Energy will likely suggest that 80-85% of the revenue guidance's midpoint is already secured by existing backlog.
BMO's stance on Fluence Energy remains positive despite the recent challenges and the lowered price target. The firm's analysis suggests that the company's growth trajectory and valuation continue to make it an attractive option for investors within the clean energy sector.
In other recent news, Fluence Energy has made significant strides in its financial performance and strategic initiatives. The company has been in advanced discussions about contracts worth approximately $1.5 billion, which could be announced alongside its fiscal first-quarter 2025 earnings. Fluence Energy has also reported a robust growth rate of 21.7% in the last twelve months, with current revenue standing at $2.7 billion.
RBC Capital has, however, cut Fluence Energy's price target to $25 from $27, while Canaccord Genuity reaffirmed its Buy rating with a price target of $34. Jefferies also maintained a Buy rating but reduced the price target to $22. Piper Sandler and Baird set targets of $20 and $24, respectively, due to potential margin pressure concerns.
In other developments, Fluence Energy announced the resignation of Senior Vice President and Chief Product Officer Rebecca Boll, with the company initiating a search for her successor. The company also plans to offer $300 million in convertible senior notes due in 2030, aiming to fund general corporate purposes and upgrade a battery cell production line. These recent developments indicate a dynamic period for Fluence Energy, with potential impacts on its future performance.
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