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On Wednesday, Canaccord Genuity adjusted its price target for Fluence Energy Inc. (NASDAQ:FLNC) shares, reducing it to $10.00 from the previous $14.00, while maintaining a Buy rating on the stock. The firm’s analyst cited a series of challenges that have impacted Fluence, including delays in deals, uncertainties around the Inflation Reduction Act, increasing competition from China, tariff disputes, and concerns over the ownership structure involving AES (NYSE:AES) and Siemens (ETR:SIEGn). The stock, currently trading at $3.68, has fallen significantly, down about 77% over the past year and trading near its 52-week low of $3.63. According to InvestingPro analysis, the company appears undervalued based on its Fair Value estimates.
Despite these issues, Canaccord remains optimistic about Fluence’s prospects in the energy storage market, expecting the company to continue generating strong free cash flow (FCF) and robust earnings, thanks to its light capital expenditure (capex) model. The analyst emphasized the essential need for reinforced grid systems and more energy storage solutions, even in light of potential project delays and clean coal initiatives. InvestingPro data shows the company maintains a healthy current ratio of 1.57, with more cash than debt on its balance sheet, though it’s currently experiencing rapid cash burn. Analysts project 22% revenue growth for FY2025.
The lowered price target is based on approximately 12 times Canaccord’s forecasted 2027 earnings per share (EPS) of $0.81 for Fluence. This valuation reflects a slight premium over the company’s peers, which trade at around 11 times their projected 2027 EPS according to Factset, a premium that Canaccord justifies by pointing to Fluence’s long-term growth potential. The company currently trades at an EV/EBITDA multiple of 28.9x, with a price-to-book ratio of 1.8x. For deeper insights into Fluence’s valuation metrics and 20+ additional ProTips, visit InvestingPro.
Canaccord also highlighted the strategic importance of Fluence’s December 2024 convertible note offering, which is due in 2030. This offering provides the company with a cash cushion against potential profit declines and supports its efforts to establish cell manufacturing in the United States, a move aimed at avoiding tariffs on Chinese cells for U.S. projects and creating strategic advantages.
Lastly, the note from Canaccord Genuity mentioned the strategic value of Fluence, noting the possibility of ownership adjustments due to the material stakes held by its corporate partners, AES and Siemens. The firm sees Fluence’s strong market share in Western markets and its long-term growth potential as attractive to third parties interested in entering the energy storage market.
In other recent news, Fluence Energy has been the subject of several analyst revisions concerning its financial outlook and operational challenges. Guggenheim Securities has adjusted its price target for Fluence Energy to $2.00, maintaining a Sell rating due to concerns over the company’s reliance on government subsidies to achieve positive EBITDA. The firm projects Fluence Energy’s EBITDA for fiscal years 2025 and 2026 to be significantly dependent on these subsidies, which raises questions about the company’s financial stability. JPMorgan has downgraded Fluence Energy from Overweight to Neutral, citing customer uncertainty around tariffs and a shortfall in the company’s year-end backlog, which only covers about 85% of its guidance range. Barclays (LON:BARC) has also downgraded the stock, reducing the price target to $5.00, and highlighted concerns over the competitive landscape and regulatory pressures affecting Fluence Energy’s revenue expectations for 2025.
Jefferies analyst Julian Dumoulin-Smith has revised the price target to $4.00 and maintained a Hold rating, noting the impact of new Chinese tariffs on the company’s gross margins and expressing skepticism about the domestic strategy until U.S. operations are fully scaled. BMO Capital Markets has maintained a Market Perform rating with a $10.00 price target, pointing to the financial challenges posed by tariffs on imported Chinese battery components, which form a significant portion of the company’s cost of goods sold. These recent developments reflect a cautious outlook from analysts, emphasizing the potential financial and operational hurdles Fluence Energy faces amid changing market conditions and regulatory environments.
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