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Tuesday, Guggenheim Securities adjusted their outlook on Fluence Energy Inc. (NASDAQ:FLNC), slashing the price target to $2.00 from the previous $6.00, while reiterating a Sell rating on the company’s stock. The stock currently trades at $4.06, having declined over 74% in the past year. According to InvestingPro analysis, the company’s current Fair Value indicates it may be overvalued at these levels. Analysts at the firm have expressed concerns over the company’s future earnings before interest, taxes, depreciation, and amortization (EBITDA), suggesting that the energy storage company’s ability to generate positive EBITDA may be overly reliant on government subsidies. These concerns are supported by InvestingPro data showing weak gross profit margins of ~13% and negative free cash flow yield, with the company quickly burning through cash despite revenue growth of 11% over the last twelve months.
The detailed commentary from Guggenheim highlighted that, according to their revised estimates, Fluence Energy’s EBITDA for fiscal years 2025 and 2026 is projected to be $10 million and $66 million, respectively. These figures are notably below the consensus and raise questions about the company’s financial performance. The analyst pointed out that the forecast includes benefits from the 45X subsidies amounting to $24 million for FY2025 and $68 million for FY2026, which essentially covers all the EBITDA expectations set forth in their updated estimates.
Given these revisions, there is a growing expectation that Fluence Energy may retract its financial guidance for FY2025 when it reports earnings for the March quarter, scheduled for May 7. The reliance on 45X subsidies to achieve these EBITDA targets presents a potential risk to the company’s financial stability, should these government incentives change or be less than anticipated. For deeper insights into FLNC’s financial health and 18 additional key ProTips, access the comprehensive Pro Research Report available on InvestingPro.
The reduction in the price target reflects the revised EBITDA forecasts and the perceived dependency on subsidies. Guggenheim’s analysis suggests caution, as the new price target represents a significant decrease from their previous valuation of the company’s stock. The Sell rating remains in place, indicating that the analysts believe the stock may not perform well in the near future.
In other recent news, Fluence Energy has faced several downgrades and adjustments from financial analysts. JPMorgan downgraded Fluence Energy’s stock from Overweight to Neutral, citing concerns over tariffs and their impact on order activity. Barclays (LON:BARC) also downgraded the company from Overweight to Equalweight and reduced the price target to $5.00, reflecting worries about the competitive landscape and regulatory pressures. Jefferies adjusted its price target to $4.00 while maintaining a Hold rating, noting the potential impact of new Chinese tariffs on the company’s gross margins. BMO Capital Markets maintained a Market Perform rating with a $10.00 price target, highlighting the challenges posed by Fluence Energy’s reliance on imported Chinese components.
Additionally, Fluence Energy has announced the promotion of Peter Williams to Senior Vice President and Chief Product and Supply Chain Officer. This move aims to enhance product development and supply chain integration. Williams, who has been with the company since July 2023, is expected to streamline operations and improve market responsiveness. These recent developments come as Fluence Energy navigates a challenging regulatory environment and seeks to optimize its operations.
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