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On Wednesday, Mizuho (NYSE:MFG) initiated coverage on Fluence Energy Inc. (NASDAQ:FLNC) with an Outperform rating and set a price target of $8.00. Currently trading at $5.21, the stock has seen significant pressure, down over 67% year-to-date. According to the firm, Fluence Energy stands out as one of the leading storage integrators globally, boasting over a 15% market share in North America and expanding its footprint in the EMEA and APAC regions. InvestingPro analysis suggests the stock is currently undervalued.
The optimism from Mizuho stems from several factors that position Fluence Energy favorably in the market. The company has a first-mover advantage in domestic sourcing, which could potentially lead to pricing and margin benefits. With revenue growth of 11% and a healthy current ratio of 1.57, the company shows operational strength despite market challenges. Additionally, there is a secular improvement in demand for battery storage as costs continue to decline. Another contributing factor is the growing need for grid reliability, which is expected to drive incremental demand for the company’s services. InvestingPro subscribers have access to over 20 additional key insights about Fluence Energy’s financial health and market position.
Mizuho’s analysis suggests that Fluence Energy’s gross margin percentage is projected to remain steady at 11-12% moving forward. Furthermore, sales growth for the company could exceed expectations in the next year. The price target of $8 reflects approximately 9 times the forecasted FY26 enterprise value to EBITDA ratio, which is consistent with the valuations of the company’s peers.
The valuation also takes into account the potential effects of the investment tax credit ( ITC (NSE:ITC)) sunset under the Trump administration. Mizuho’s coverage initiation and price target point to a positive outlook for Fluence Energy as it continues to navigate the energy storage market.
In other recent news, Fluence Energy Inc. reported a challenging first quarter of fiscal year 2025, which has led to a series of revised financial expectations and analyst ratings. BofA Securities downgraded Fluence Energy from Buy to Neutral, reducing the price target from $20.00 to $8.00, citing concerns over execution risks and increased competition. In contrast, Truist Securities maintained its Buy rating with a $7.00 price target, highlighting a significant agreement with Cordelio Power for over 1.0GWh of battery energy storage equipment. Canaccord Genuity also adjusted its price target to $14.00 from $34.00 while maintaining a Buy rating, reflecting a revised valuation based on updated earnings projections.
Jefferies lowered its price target to $7.00 from $15.00 following Fluence’s missed first-quarter financials and reduced growth outlook, expressing concerns about the company’s ability to meet its targets amid competition. Goldman Sachs reduced its price target to $13.00 from $26.00 but upheld a Buy rating, suggesting that despite current challenges, Fluence Energy’s risk-reward proposition remains attractive. The firm pointed out that issues in Australia are unique to the company and could be resolved with new products and cost strategies. Analysts are closely monitoring Fluence Energy as it navigates a competitive landscape and strives to improve its financial performance in the coming years.
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