On Tuesday, UBS maintained a Buy rating on Bloom Energy Corp . (NYSE: NYSE:BE) shares and raised the company's price target from $21.00 to $33.00. The adjustment follows Bloom Energy's announcement of a significant supply agreement with American Electric Power (NASDAQ:AEP), marking a milestone as the world's largest commercial procurement of fuel cells to date.
Bloom Energy recently disclosed that it has entered into a supply agreement with AEP for up to 1 gigawatt (GW) of its fuel cell products. Initially, AEP has ordered 100 megawatts (MW) of fuel cells, with expectations for additional orders to come in 2025. This deal represents the most extensive utility fuel cell technology initiative in the United States.
American Electric Power anticipates a substantial increase in commercial load, projecting approximately a 20% yearly growth over the next three years, largely driven by data center development. AEP has also indicated that the costs associated with these fuel cell projects would be shouldered by large customers under specific contracts.
The UBS analyst believes that this landmark order could pave the way for further agreements between Bloom Energy, AEP, and potentially other utilities. With the rising demand for electricity due to the expansion of data centers and AI-driven applications, Bloom Energy is considered to be in a strong position to benefit from this trend.
In other recent news, Bloom Energy has seen a flurry of significant developments. The company reported Q3 revenues of $330 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of $21 million. Despite falling short of expectations, Bloom Energy maintained its full-year revenue and gross margin forecasts.
The company also secured three new orders, including an 80-megawatt project in South Korea, and is ramping up its manufacturing capacity in Fremont in response to anticipated demand.
HSBC moved its rating from Buy to Hold for Bloom Energy, citing manufacturing capacity and financial considerations. However, the firm forecasts that Bloom will generate positive free cash flow in 2026, a year earlier than previously expected. Meanwhile, RBC Capital Markets, BMO Capital Markets, and Piper Sandler all increased their price targets for Bloom Energy, reflecting confidence in the company's growth trajectory.
The company's agreement with American Electric Power (AEP) to supply up to 1.0 gigawatts of its solid oxide fuel cell stationary power solution has been highlighted as a significant sales opportunity. In addition, Bloom Energy's recent deal with a large utility was seen as a demonstration of the viability of the company's products for powering large-scale data centers, potentially paving the way for similar future agreements.
Finally, analysts from firms such as Susquehanna and Piper Sandler have expressed confidence in Bloom Energy's growth trajectory following these developments, emphasizing the need for the company to deliver on its promises in the upcoming fourth quarter results.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Bloom Energy's financial position and market performance, providing context to the UBS analyst's bullish outlook. The company's market capitalization stands at $5.93 billion, reflecting investor confidence in its growth potential.
Bloom Energy's stock has shown remarkable momentum, with a 173.16% price return over the past month and a 96.44% return over the last year. This aligns with the UBS analyst's positive view and the potential impact of the AEP deal. An InvestingPro Tip notes that the stock has seen a "significant return over the last week," which may be attributed to the recent AEP agreement announcement.
Despite the positive market reaction, it's worth noting that Bloom Energy is not currently profitable, with a negative P/E ratio of -49.58 for the last twelve months as of Q3 2024. However, another InvestingPro Tip suggests that "net income is expected to grow this year," which could support the UBS price target increase.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for Bloom Energy, providing a deeper understanding of the company's financial health and market position.
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