Shares of Bloom Energy Corp. are experiencing a downturn, making it their worst monthly performance in almost two years. This comes after BofA Securities adopted a bearish stance on the hydrogen manufacturer due to concerns about the company's revenue growth not meeting expectations.
Analyst Julien Dumoulin-Smith, who recently downgraded Bloom Energy's stock rating from neutral to underperform, now anticipates flat revenue over the next few years. This is a significant departure from earlier projections of accelerating growth.
To support his downgrade, Dumoulin-Smith pointed out that there is little evidence of the anticipated commercial successes, apart from the recent upsizing and extension of an order by Korea-based partner SK Group. As a result, Dumoulin-Smith believes that the market has yet to adjust its expectations accordingly.
As a consequence of this downgrade, the analyst has lowered the price target for Bloom Energy's stock from $16 to $10, implying a possible downside of about 13% from its current levels.
In response to this development, Bloom Energy's stock has plummeted by 7.3% in morning trading. This decline follows a 21.9% slump in January, making it the worst month for the company since its 23.2% drop in April 2022.
Revenue Estimates Revised Downward
Dumoulin-Smith, a respected analyst, has made some significant revisions to his revenue estimates for the years ahead. According to his latest assessment, he has reduced his 2024 revenue estimate by 15% to $1.40 billion, and his 2025 forecast by 25% to $1.44 billion.
When compared to the FactSet revenue consensus for 2023, which stands at $1.45 billion, and Wall Street's expectations of revenue reaching $1.75 billion in 2024 and $2.28 billion in 2025, Dumoulin-Smith's revised figures indicate a more cautious outlook.
Uncertainty Surrounding Leadership Change
Dumoulin-Smith has also expressed concern regarding the recent termination of the company's chief operating officer and the implications it may have. Of particular note is the fact that the replacement chosen hails from outside the company, introducing an additional layer of uncertainty.
This change, coupled with its timing, raises questions about the company's ability to meet its fourth-quarter targets for fiscal year 2024 and build positive momentum into the following year. Management had previously acknowledged the need to make progress in the final months of 2023 in order to achieve their targets for that year and pave the way for growth in 2024.
Pending Fourth-Quarter Results
The company's fourth-quarter results are scheduled to be reported next week, around Feb. 8, according to FactSet. These results will provide further insight into the company's performance and whether it has been able to meet expectations.
Over the past three months, the company's stock has experienced a rally of 18.3%. However, looking at the bigger picture, it has endured a significant decline of 53.7% over the past year. In contrast, during that same period, the S&P 500 index has seen a 20.2% increase.
The company's future trajectory will likely depend on its ability to address the challenges identified by Dumoulin-Smith and regain investor confidence.
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