On Monday, Jefferies reaffirmed a Hold rating with a steady price target of $11.00 for Bloom Energy Corp (NYSE:BE), following the recent auction results in South Korea. The auction, which prioritizes price and domestic content, awarded significantly more fuel cell orders to Doosan over SK, Bloom Energy's partner. Despite the outcome, Bloom Energy expressed confidence in its ongoing relationship with SK and its future prospects in the Korean market.
Bloom Energy emphasized that the Korean auction represents just one opportunity for its fuel cells and highlighted SK's additional development projects beyond the auction. The company anticipates that shipment volumes to Korea in 2024 and the subsequent years will be on par with previous years, estimating around $400 million annually. In the first half of 2024, SK contributed to 37% of Bloom Energy's total revenue and 55% of its Product revenue, which translates to approximately $209 million.
The analyst noted that the auction may set a trend favoring domestic content over pricing or efficiency. With SK's commitment to purchase 500MW of fuel cells from 2024 to 2027, and quarterly commitments starting in 2025, the spotlight is on the pricing dynamics, as competitive bidding may have influenced the implied megawatts shipped to SK in the first half of 2024.
Looking ahead to the third quarter of 2024, Jefferies estimates Bloom Energy's revenue to be $357 million, which is 10% lower than the consensus estimate of $394 million. The forecast suggests an improvement from the second quarter but a decrease from the same period in the previous year. The expected gross margins are around 27%, with a significant increase anticipated in the fourth quarter to achieve the full-year target of 28%.
Finally, the firm is awaiting further details on SK's receivables, which account for 66% of Bloom Energy's receivables. There's an expectation for positive cash flow from operations in the second half of the year, driven by the conversion of inventory and receivables. The specific timeline for the deployment of Bloom Energy's inventory, currently held by SK for designated projects, remains unclear.
In other recent news, Bloom Energy Corporation reported a year-over-year increase of 11.5% in its second-quarter revenue for fiscal year 2024, reaching $335.8 million.
The company projects annual revenues between $1.4 billion to $1.6 billion and anticipates a non-GAAP operating profit of $75 million to $100 million. In a significant development, Jefferies downgraded Bloom Energy's stock from Buy to Hold, adjusting the price target to $11.00 and reducing revenue estimates for 2025 and 2026 to be 15% and 25% below consensus estimates, respectively. On the other hand, RBC Capital maintained its Outperform rating on Bloom Energy's shares, with a steady price target of $15.00.
Bloom Energy's Chief Commercial Officer, Aman Joshi, was granted performance-based stock options for the purchase of a target of 180,000 shares of Class A common stock. 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. Furthermore, Bloom Energy confirmed its ongoing partnership with SK ecoplant Co., Ltd., underscoring the company's commitment to the Korean market. These are recent developments that investors may find noteworthy.
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