Easy come, easy go. A month ago, Bloom Energy’s stock surged by 11% in a single day following a report of strong sales despite a significant GAAP loss in its Q2 2024 earnings. However, today, the scenario has reversed for the fuel cell stock, as it plummets 11.7% by 10:05 a.m. ET.
The reason? Investment bank Jefferies.
Jefferies analyst Lloyd Byrne criticized Bloom Energy’s management for offering investors “minimal transparency” regarding the 2023 announcement of an agreement to sell 500 megawatts of Bloom fuel cell boxes to Korea’s SK Group, which should generate $4.5 billion in revenue for Bloom over the next two decades.
According to S&P Global Market Intelligence, the deal’s value is about three times Bloom’s 2023 revenue. Yet, nine months post-announcement, Jefferies is concerned about the lack of clarity on the deal’s progress. Byrne also pointed out issues with Bloom’s backlog size and the risk of federal tax credits for fuel cells expiring this year, which is beyond Bloom’s control.
Consequently, Jefferies downgraded Bloom to hold and reduced its sales forecasts for 2025 and 2026 by 15% and 25%, respectively.
But is Bloom Energy stock still a good investment?
This is merely one analyst’s perspective. Bloom Energy, on the other hand, isn’t backing down.
In its August report, the company projected full-year sales for 2024 ranging from $1.4 billion to $1.6 billion, surpassing analyst estimates. Management also anticipated an increase of about 6 percentage points in gross profit margins and predicted that its non-GAAP (adjusted) operating profits would become positive this year, ranging from $75 million to $100 million.
If Bloom’s predictions are accurate and Byrne’s concerns are unfounded, the company might achieve a legitimate GAAP profit in 2025. This profit might not fully justify the stock’s $2.5 billion market capitalization but could certainly reignite interest in the stock.
