On Thursday, ESS Inc. (NYSE:GWH) stock, a manufacturer of long-duration energy storage solutions, maintained its Outperform rating and a price target of $3.00 by Oppenheimer.
The company's progress was acknowledged despite reporting lower than expected revenue, attributed to delays in energy warehouse (EW) shipments caused by issues at a key partner's end.
The firm recognized ESS Inc.'s efforts in scaling demand and reducing risks associated with its balance sheet. Cost-cutting measures in manufacturing processes were also highlighted as positive steps.
The analyst noted the company's deepening relationship with the Sacramento Municipal Utility District (SMUD), emphasizing ESS Inc.'s technology leadership and its potential influence on other municipal utilities' technology choices.
ESS Inc. was praised for the geographic diversity of its initial customer base, which is considered a significant advantage. This diversity aids the company in understanding various regional grid needs and showcases the effectiveness of its technology across different environments. These include distributed applications, large-scale systems, and microgrids.
Lastly, the firm commended the support ESS Inc. has received from the Export-Import Bank of the United States (ExIm Bank). This backing is seen not only as an efficient source of capital for the company but also as a boost for its international sales efforts. Based on these observations, the firm has adjusted its estimates while reiterating the $3.00 price target for ESS Inc. stocks.
In other recent news, ESS Inc. has been the focus of several key developments. The company's Q1 earnings report showed revenues of $2.7 million, falling short of Deutsche Bank's projected $4 million. Despite this, the adjusted EBITDA of negative $15 million was better than the anticipated negative $20 million.
In analyst activity, Roth/MKM initiated coverage on ESS Inc., highlighting the company's potential growth, particularly through the expansion of its Total Addressable Market (TAM) with its front-of-the-meter (FTM) Energy Center (EC) storage solution, which is expected to ramp up in the latter half of 2024.
This development, along with the company's strategic steps towards higher production volumes and cost reductions, is expected to provide a favorable risk/reward scenario for investors.
Meanwhile, Deutsche Bank revised its price target for ESS Inc. to $1.15, maintaining a 'hold' rating, while TD Cowen adjusted its price target to $2.00 and retained a 'buy' rating.
In other corporate developments, ESS Inc. announced a new partnership with Sapele Power in Nigeria for an 8-megawatt-hour storage deployment. The company is also focusing on cost reduction initiatives in anticipation of reaching non-GAAP gross margin profitability by year-end.
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