On Monday, Wells Fargo adjusted its outlook for Bloom Energy Corp . (NYSE:BE), increasing the stock price target to $14 from $12 while maintaining an Equal Weight rating on the company's shares. The revision follows Bloom Energy's reported performance in the first quarter and the anticipated shift to profitability in its service operations.
The analyst from Wells Fargo noted that the adjustment in estimates is a response to Bloom Energy's first-quarter results, which did not meet expectations, and the company's progress toward profitability in its service segment. The new price target of $14 per share represents a $2 increase from the previous target.
Bloom Energy, which specializes in manufacturing solid oxide fuel cells, has seen a rise in orders from data centers. However, the timing of larger deals remains uncertain, and these potential agreements have not been factored into the current financial model.
The revised stock price target is based on a combination of a three-stage discounted cash flow model, which includes a weighted average cost of capital (WACC) of 9.6% and a long-term growth rate of 4%, as well as a target enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple for the year 2025 estimated at 14.5 times.
The target EV/EBITDA multiple is derived from a regression analysis of comparable machinery companies, which serves as a peer group for Bloom Energy as it matures.
InvestingPro Insights
Following the updated outlook from Wells Fargo, investors seeking further insights into Bloom Energy Corp. (NYSE:BE) can consider several key metrics and tips provided by InvestingPro. Despite the current lack of profitability, the company is expected to grow its net income this year, as noted in one of the InvestingPro Tips. This aligns with the analyst's anticipation of a shift to profitability in Bloom Energy's service operations.
The company's stock has experienced significant price volatility, but it has also shown a strong return over the last month and three months, with returns of 28.04% and 38.23%, respectively. This could indicate a positive investor sentiment in the short term.
InvestingPro Data shows a market capitalization of $2.92 billion, which, when coupled with a high Price / Book multiple of 6.23, suggests that the market values the company's assets optimistically. The revenue growth over the last twelve months was modest at 1.59%, and the company's liquid assets exceed its short-term obligations, providing financial stability.
For investors interested in deeper analysis and additional tips, there are more than 8 InvestingPro Tips available for Bloom Energy, which can be found at https://www.investing.com/pro/BE. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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