On Wednesday, Truist Securities updated its outlook on Fluence Energy Inc. (NASDAQ: NASDAQ:FLNC), raising the price target to $28 from $25 while maintaining a Buy rating on the stock. The firm anticipates that Fluence Energy will continue to benefit from the growing U.S. storage market, leveraging its domestic manufacturing capabilities as the demand for domestically produced content increases.
The analyst from Truist Securities expressed confidence in Fluence Energy's future, expecting the company to experience continued growth in its project pipeline and backlog, with additional upside potential coming from the AI and data center sectors' need for uninterrupted power supply. Despite the price target change, the firm's revenue and EBITDA estimates for fiscal years 2024 and 2025 remain the same at $2.76 billion with $59 million in EBITDA and $4.12 billion with $199 million in EBITDA, respectively.
These projections by Truist Securities align with the consensus for fiscal year 2024 and slightly exceed the street's expectations for fiscal year 2025. The firm's optimism is also reflected in its valuation approach, applying a 13x multiple to its calendar year 2025 EBITDA estimate of $246 million, up from the previous 12x multiple and above the peer average of 11x.
The analyst highlighted that Fluence Energy stands out as one of their top picks, not only leading into the company's earnings report but also as a long-term investment due to its strong market position, customer profile, and the secular tailwinds propelling the industry. The increase in the price target to $28 is a testament to the firm's belief in the company's robust setup and promising outlook.
In other recent news, Fluence Energy has experienced several shifts in analyst ratings and price targets. Citi downgraded the company to Neutral from Buy, and reduced the stock target to $24, citing potential risks to the firm's financial guidance for fiscal 2025 and increased competition. Jefferies, however, initiated coverage on Fluence Energy, setting a Buy rating with a price target of $26.00, indicating optimism about the company's growth trajectory. Baird and UBS both maintained their Buy ratings but reduced their price targets to $27 and $28, respectively.
Fluence Energy reported revenues of $623 million and new orders exceeding $700 million, and confirmed its revenue growth expectations of 35%-40% for fiscal 2025, holding to the previously projected midpoint of $3.0 billion. The company also launched a new Remote Monitoring and Diagnostics Center in Bengaluru, India, aimed at improving operational data intelligence for its global asset fleet.
InvestingPro Insights
Fluence Energy's recent performance and financial metrics provide additional context to Truist Securities' optimistic outlook. According to InvestingPro data, the company's market capitalization stands at $3.84 billion, reflecting its significant presence in the energy storage market.
InvestingPro Tips highlight that Fluence Energy's net income is expected to grow this year, and analysts anticipate sales growth in the current year. These projections align with Truist Securities' positive stance on the company's future performance. Additionally, the company holds more cash than debt on its balance sheet, which could provide financial flexibility as it pursues growth opportunities in the expanding U.S. storage market.
However, it's worth noting that Fluence Energy currently suffers from weak gross profit margins, with InvestingPro data showing a gross profit margin of 12.1% for the last twelve months as of Q3 2024. This metric may be an area for potential improvement as the company scales its operations and leverages its domestic manufacturing capabilities.
The stock's recent performance has been strong, with InvestingPro data indicating a 20.95% price return over the last three months and a 32.71% return over the past six months. This aligns with Truist Securities' view of Fluence Energy as a top pick and reflects growing investor confidence in the company's prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Fluence Energy, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.