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On Friday, JPMorgan analysts downgraded Fluence Energy Inc. (NASDAQ:FLNC) stock from Overweight to Neutral. Alongside the rating change, the price target was adjusted to $7.00 from the previous $14.00. The downgrade comes as the stock trades near its 52-week low of $3.63, having declined over 82% in the past six months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model, with technical indicators suggesting oversold conditions. The downgrade was driven by the anticipation of subdued order activity due to customer uncertainty around tariffs, including both Anti-Dumping/Countervailing Duties (AD/CVD) and broader US/China tariffs.
Fluence Energy's year-end backlog was only sufficient to cover approximately 85% of the mid-point of its guidance range. While InvestingPro data shows the company maintains a healthy current ratio of 1.57 and holds more cash than debt, the backlog shortfall raised concerns about the company's ability to deliver 'quick turn' business within the fiscal year ending September 30, especially considering the typical lead times of 5-6 months. There is also potential for further negative impacts on estimates if backlog projects are delayed due to the tariff uncertainty.
Despite the near-term challenges, JPMorgan analysts still foresee growth for Fluence Energy in FY26. This aligns with InvestingPro data showing a projected 22% revenue growth for FY2025, with analysts expecting the company to turn profitable this year. This outlook is based on the ramp-up of the company's US-made cell manufacturing, which, although it relies on imported raw materials and is subject to tariff risks, should be in a relatively better position compared to peers. However, the analysts noted that near-term catalysts appear to lean towards the negative side, especially concerning order activity and guidance updates, prompting their decision to adopt a more cautious stance. For deeper insights into FLNC's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Fluence Energy has been facing several challenges impacting its financial outlook. Barclays (LON:BARC) downgraded Fluence Energy's stock from Overweight to Equalweight, lowering the price target to $5.00, citing concerns about the competitive landscape and regulatory pressures, including tariffs and potential future regulations. The company had already reduced its 2025 revenue guidance from $4 billion to $3.4 billion, reflecting these challenges. Jefferies also adjusted its price target for Fluence Energy to $4.00 while maintaining a Hold rating, anticipating that new tariffs could significantly affect the company's gross margins by reducing them by $50-60 million in fiscal year 2025. BMO Capital Markets maintained a Market Perform rating with a $10.00 price target, noting the company's reliance on imported Chinese components and the financial impact of tariffs. Additionally, Fluence Energy announced the promotion of Peter Williams to Senior Vice President and Chief Product and Supply Chain Officer, aiming to streamline product development and supply chain integration. This leadership change is expected to enhance the company's market responsiveness and performance. As Fluence Energy navigates these developments, the financial impacts of tariffs and regulatory changes remain focal points for investors.
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