UBS has adjusted its outlook on Fluence Energy Inc. (NASDAQ: NASDAQ:FLNC), reducing the price target to $28 from the previous $32 while retaining a Buy rating on the stock.
The adjustment comes after Fluence Energy reported its third-quarter results for the fiscal year 2024, which exceeded expectations. The company also tightened its full-year 2024 guidance to the lower end of previous estimates.
Fluence Energy announced a significant increase in order flow during the quarter, with the backlog expanding by 55% year-over-year to $4.5 billion. This growth surpasses the $3.9 billion revenue forecast for the upcoming four quarters.
In response to the financial results, UBS revised its adjusted EBITDA projections for calendar years 2024, 2025, and 2026 to $75 million, $275 million, and $446 million, respectively. These figures were adjusted down from earlier estimates of $94 million, $351 million, and $593 million.
Consequently, UBS also updated its adjusted earnings per share (EPS) expectations for the same years. The new forecasts are $0.15, $1.02, and $1.71 for 2024, 2025, and 2026, respectively. These figures reflect a decrease from the previous estimates of $0.26, $1.44, and $2.48 per share.
The investment firm cited Fluence Energy's consistent project execution, which has delivered a 10% gross margin for the past four consecutive quarters, as a key factor in maintaining profitability.
UBS underscored the company's position in the rapidly growing battery market, which is being fueled by an increase in renewable energy penetration. As a pure-play in the energy storage sector, which is among the fastest-growing segments in energy transition investment, Fluence Energy is still considered a top Buy by UBS.
Fluence Energy has been making significant strides in the energy storage sector. The company's Q2 2024 earnings were impressive, with revenues reaching $623 million and new orders surpassing $700 million. As part of a broader strategy to streamline its capital structure, Fluence Energy retired a significant portion of its Class B-1 common stock, reducing its total authorized shares.
The company has also launched a new Remote Monitoring and Diagnostics Center (RMDC) in Bengaluru, India, aiming to improve operational data intelligence for its global asset fleet. Fluence Energy's new facility, integrated with the company's Global Innovation Center, is expected to enhance its services' performance and customer value through optimized asset performance.
InvestingPro Insights
Following UBS's updated outlook on Fluence Energy Inc. (NASDAQ:FLNC), the InvestingPro platform offers additional insights. Notably, the company holds more cash than debt, which is a positive sign for its financial stability. Moreover, analysts are optimistic about Fluence's future, expecting net income and sales growth in the current year. This aligns with the company's reported increase in order flow and expanding backlog, reinforcing its growth potential.
However, the InvestingPro data indicates a challenging short-term scenario for Fluence Energy. With a market capitalization of $2.48 billion and a high Price / Book ratio of 6.01, the company is trading above its book value, which could suggest a premium on its current stock price. Additionally, the stock has experienced significant volatility and price declines over recent periods, including a 32.09% drop over the last three months. These metrics are particularly relevant for investors considering the recent price target adjustment by UBS.
For those looking for a deeper dive, the InvestingPro platform lists 13 additional tips, including analysts' upward revisions for earnings and concerns about weak gross profit margins. With a fair value estimate of $16.99 according to InvestingPro, compared to the analyst target of $27, investors have a range of perspectives to consider. Access to these comprehensive insights can be found at https://www.investing.com/pro/FLNC.
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