On Friday, Bloom Energy Corp . (NYSE:BE) shares experienced a significant drop, plunging approximately 10% in value. The decline in the stock price came after financial services firm Jefferies downgraded the company's rating to "Hold" from a previously more favorable stance. The downgrade has contributed to a wave of selling pressure on the stock during the premarket session, which carried into regular trading hours.
Jefferies cited several reasons for the downgrade, including concerns over uncertainties in Bloom Energy's backlog, the upcoming expiration of the Investment Tax Credit (ITC) in its current form by the end of 2024, and a lack of transparency surrounding the company's dealings with SK Group. While acknowledging that Bloom Energy could benefit from the growing data center market, as suggested by recent orders, the firm pointed out potential risks that could arise from a need for updated disclosures.
In addition to the downgrade, Jefferies also adjusted its price target (PT) for Bloom Energy, setting it at $11.00. This adjustment reflects the firm's cautious outlook on the company's future performance. The revised price target represents a decrease from the firm's previous target, indicating a more conservative estimate of Bloom Energy's stock value.
The firm also revised its estimates for Bloom Energy's top-line revenue for the fiscal years 2025 and 2026. Jefferies' new projections are now 15% and 25% below the consensus estimates, respectively. This suggests that the firm expects Bloom Energy to underperform compared to the wider market expectations.
The analyst's statement highlighted the challenges facing Bloom Energy, emphasizing the importance of clarity in order backlogs and financial disclosures. The statement concluded with a note on the adjustments to the revenue estimates, underscoring the firm's more bearish view on the company's financial prospects in the coming years.
In other recent news, Bloom Energy Corp. witnessed a significant shift in its stock rating as Jefferies downgraded it from Buy to Hold. The downgrade, which was influenced by concerns over the company's backlog, the impending expiration of the Investment Tax Credit (ITC), and a lack of transparency in dealings with SK Group, was accompanied by a revision of the price target to $11.00 and a decrease in revenue estimates for 2025 and 2026.
In addition to this, Bloom Energy reported an 11.5% year-over-year increase in its second-quarter revenue for fiscal year 2024, reaching $335.8 million. The company's annual revenue projections range between $1.4 billion to $1.6 billion, and it anticipates a non-GAAP operating profit of $75 million to $100 million.
In a recent development, Bloom Energy's Chief Commercial Officer, Aman Joshi, was granted performance-based stock options, providing for the purchase of a target of 180,000 shares of Class A common stock. The options could increase to a maximum of 270,000 shares based on the company's performance, aligning with the company's operational and financial targets.
Despite an outflow of $175.5 million due to an increase in receivables, Bloom Energy ended the quarter with a strong cash position of $637.8 million. The company also anticipates service profitability for the full year 2024, a first in its history, and has achieved record efficiencies using hydrogen as fuel.
InvestingPro Insights
Following the recent downgrade of Bloom Energy Corp. (NYSE:BE) by financial services firm Jefferies, a closer look at the company's financial health and market performance through InvestingPro data could provide additional context for investors. According to real-time metrics, Bloom Energy's market capitalization stands at $2.24 billion, with a troubling P/E ratio of -7.64, indicating that the company is not currently profitable. Furthermore, the company's Price/Book ratio as of the last twelve months leading up to Q2 2024 is relatively high at 5.93, which could suggest that the stock is overvalued relative to its book value.
InvestingPro Tips highlight several critical factors that investors might consider. Bloom Energy is expected to face challenges in generating net income growth this year, with 11 analysts having revised their earnings downwards for the upcoming period. This aligns with Jefferies' concerns and their revised revenue estimates. Additionally, Bloom Energy is also flagged for quickly burning through cash, which could be a red flag for long-term sustainability.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/BE. These tips delve deeper into the company's financials and market position, offering a more nuanced view of its potential risks and opportunities. As the market digests the implications of Jefferies' downgrade, these insights may prove valuable in assessing Bloom Energy's trajectory.
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