Bloom Energy Corporation

BE Details

Bloom Energy Corporation (NYSE: BE) provides clean, reliable, and affordable energy, and simultaneously, it has developed an energy server platform. The Bloom Energy Server provides highly reliable and resilient power to its customers across industries.

Results Performance for the Third Quarter Ended 30 September 2021 (Q3FY21)

• The company recorded acceptances of 353 systems in Q3FY21, up 12.4% YoY.
• The revenue stood at $207.2 million in Q3FY21, up 3.5% YoY, while the revenue was up 11.4% YoY, excluding a $14.2 million prior year one-time revenue benefit that did not repeat.
• GAAP Gross Margin stood at 17.8% in Q3FY21, while non-GAAP Gross Margin stood at 19.2% in Q3FY21.
• The company launched commercial availability of Bloom Electrolyzer and Hydrogen Energy Server starting in 2022.

GAAP Profit and Loss Statements (Source: Company Reports)

Outlook

The management is self-assured for growth in its business, considering its advancement in deploying its products and the demand from its partners and customers, investment in its technology and infrastructure, and continuous focus on innovation.

On 25 October 2021, the company and SK ecoplant stated an expansion of their strategic partnership to accelerate hydrogen commercialization.

Key Risks

The company’s operations are exposed to global economic conditions and uncertainties in the operating geopolitical environment. Further tremendous upfront costs incurred for its energy servers, manufacturing defects risk, lengthy sales, and installation cycle of its products are other potential risks.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

The company has delivered a 6-month and 9-month return of ~+35.61% and ~-27.76%, respectively. The stock is trading higher than the average of the 52-week high price of $44.95 and the 52-week low price of $12.81.

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Median), considering its negative net margin that stood at -27.3% in Q3FY21 versus the industry median of 8.9% and a longer cash conversion cycle in Q3FY21.

Considering the factors above, the current trading levels, and the associated business risks, we advise the investors to book profits. Accordingly, we give a “Sell” rating on the stock at the current market price of $32.74 per share as on 9:30am Eastern Time (New York, USA) as of 4^th November 2021.

Technical Overview:

Daily Price Chart

Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.