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Bloom Energy Corp . (NYSE: NYSE:BE) experienced a shift in stock rating as Jefferies downgraded the company from Buy to Hold. Alongside the rating change, the firm also revised the price target downward to $11.00 from the previous $15.00.
The downgrade was influenced by several factors that Jefferies identified as potential risks. The analyst pointed to the uncertainty surrounding the company's backlog, the impending expiration of the Investment Tax Credit (ITC) in its current form by the end of 2024, and the lack of transparency concerning Bloom Energy's dealings with SK Group.
Despite acknowledging recent orders from data centers that suggest a positive outlook for Bloom Energy, the analyst expressed concerns over the need for the company to update disclosures.
The lack of clarity on future orders prompted Jefferies to revise its revenue estimates for Bloom Energy for the years 2025 and 2026, resulting in projections that are 15% and 25% lower, respectively, than the consensus.
The revised price target of $11.00 reflects Jefferies' adjusted expectations for Bloom Energy's financial performance in the coming years. This new target represents a significant reduction from the previous target of $15.00, indicating more conservative expectations for the company's stock valuation.
In other recent news, Bloom Energy reported an 11.5% year-over-year increase in its second-quarter revenue for fiscal year 2024, reaching $335.8 million.
The company projects annual revenues between $1.4 billion to $1.6 billion and a non-GAAP operating profit of $75 million to $100 million, bolstered by advancements in hydrogen fuel cell efficiency and a robust commercial pipeline.
In an effort to attract and retain top talent, Bloom Energy has granted performance-based stock options to its Chief Commercial Officer, Aman Joshi. The options provide for the purchase of a target of 180,000 shares of Class A common stock, potentially increasing to a maximum of 270,000 shares based on the company's performance.
Analyst Colin Rusch questioned the increase in receivables and the write-down of contract assets, with CEO KR Sridhar expressing confidence in Bloom's business model and execution. Despite an outflow of $175.5 million due to an increase in receivables, Bloom Energy ended the quarter with a strong cash position of $637.8 million.
InvestingPro Insights
Recent data from InvestingPro provides a nuanced view of Bloom Energy Corp's financial health and market performance. With a market capitalization of $2.51 billion, the company's current Price to Earnings (P/E) ratio stands at -8.61, reflecting market skepticism about its profitability in the near term. This skepticism is further underscored by a negative P/E ratio for the last twelve months as of Q2 2024, which sits at -13.31, and a Price to Book (P/B) ratio of 5.93, suggesting a premium valuation compared to the company's book value.
While Bloom Energy's revenue shows a slight decline of 0.22% over the last twelve months as of Q2 2024, there's a silver lining with a quarterly revenue growth of 11.52% in Q2 2024, indicating some resilience in its business operations. However, the company's stock price has experienced significant volatility, with a three-month total price return of -28.14%, reflecting the market's reaction to various challenges it faces.
InvestingPro Tips highlight that Bloom Energy may struggle with liquidity as it's quickly burning through cash, which is a critical consideration given the company's need for capital to fund its growth initiatives. Additionally, with 11 analysts having revised their earnings downwards for the upcoming period, investors should be aware of the potential headwinds in earnings expectations. For those seeking a deeper analysis, InvestingPro offers additional tips on Bloom Energy, providing a comprehensive outlook on the company's financial prospects.
It's worth noting that while the short-term outlook may appear challenging, analysts predict that the company will become profitable this year, which could provide a positive trajectory for the stock. The full suite of InvestingPro Tips can offer more detailed insights, which are available for those interested in a more thorough analysis.
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