Friday saw Bloom Energy Corp . (NYSE: NYSE:BE) shares decline by approximately 10% following a downgrade by investment firm Jefferies. The firm shifted its stance on the energy company's stock to "Hold" from a previously more favorable rating. This adjustment came amid a premarket session that witnessed the stock breaking lower, with continued selling pressure observed thereafter.
Jefferies cited several reasons for the downgrade, including concerns over the uncertainty of Bloom Energy's backlog, the impending expiration of the Investment Tax Credit (ITC) in its current form by the end of 2024, and a lack of transparency around the company's dealings with SK Group.
While acknowledging the positive aspect of recent orders from data centers for Bloom Energy, Jefferies emphasized the potential risks that could arise from a need for updated disclosures.
The investment firm also revised its price target for Bloom Energy, setting it at $11.00, a decrease from the previous target. The new price target reflects Jefferies' adjusted expectations due to the concerns mentioned. In addition to the downgrade and price target adjustment, Jefferies also lowered its revenue estimates for Bloom Energy for the fiscal years 2025 and 2026, positioning them 15% and 25% below the consensus, respectively.
The downgrade and subsequent stock performance represent a significant shift in market sentiment towards Bloom Energy. The company, which specializes in manufacturing and distributing solid oxide fuel cells, has been facing the challenges highlighted by Jefferies as it navigates the evolving energy sector landscape and its financial positioning in the coming years.
In other recent news, 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 projects annual revenues between $1.4 billion to $1.6 billion and a non-GAAP operating profit of $75 million to $100 million.
Amid these developments, Bloom Energy's shares were downgraded by Jefferies from Buy to Hold, citing concerns over the company's backlog and the impending expiration of the Investment Tax Credit (ITC) in its current form by the end of 2024. The firm also revised its revenue estimates for Bloom Energy for the years 2025 and 2026, resulting in projections that are 15% and 25% lower, respectively, than the consensus.
In addition to financial updates, Bloom Energy has granted performance-based stock options to its Chief Commercial Officer, Aman Joshi, providing for the purchase of a target of 180,000 shares of Class A common stock, potentially increasing to a maximum of 270,000 shares based on the company's performance.
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.
These recent developments reflect Bloom Energy's continued efforts to scale profitably and deliver reliable energy solutions across multiple sectors. However, the company's future performance is contingent on various factors, including the successful execution of its strategic initiatives and the potential impact of policy changes.
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