Bloom Energy hit with another downgrade on valuation and production limits

Published 02/10/2025, 15:02
© Reuters.

Investing.com -- Mizuho downgraded Bloom Energy to Neutral on Thursday, saying the fuel-cell maker’s internal production capacity cannot keep pace with soaring demand from AI data center developers.

But the brokerage lifted price target to $79 from $48.

Bloom has become one of the market’s biggest AI infrastructure bets, with its shares more than triple this year. But Mizuho said the stock’s run-up now caps further upside, as Bloom trades roughly in line with traditional gas turbine makers despite more aggressive growth assumptions.

Mizuho analysts said Bloom’s 900-megawatt Wyoming project shows booming interest from utilities supplying power to data centers. But Bloom can only generate 2 gigawatts of annual capacity by end-2026 and would need fresh capital commitments to reach 5 GW by 2029.

“We believe it would be prudent to wait for a multi-year backlog before committing to a new facility,” Mizuho wrote, estimating equipment volumes will grow at a 53% compound rate between 2025 and 2030.

Bloom has faced a wave of similar pushback in recent weeks. Last month, Jefferies cut the stock to Underperform, saying investor enthusiasm has run ahead of fundamentals and that growth beyond 2026 remains unclear.

Bank of America has also argued Bloom’s valuation is unsupported by its earnings outlook, slashing its price target to $24 from $86.

Mizuho’s $79 target implies Bloom is already pricing in roughly 14 times expected 2028 EBITDA, a level it said matches gas turbine peers.

It added that Bloom’s service contracts are shorter in duration than traditional industrial players, which could justify a discount.

Mizuho said upside exists only if Bloom accelerates its capacity ramp several years earlier than planned.

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