Shares of Bloom Energy Corp. sagged Monday toward their worst monthly performance in nearly two years after BofA Securities turned bearish on the hydrogen manufacturer, citing concerns that revenue growth won’t ramp up as much as was expected.
Analyst Julien Dumoulin-Smith said he has not seen evidence of the commercial successes that have been anticipated, and therefore now expects revenue to be flat over the next few years, compared to previous expectations of accelerating growth.
Dumoulin-Smith downgraded the stock
BE,
-8.30%
to underperform, less than two months after cutting the rating to neutral from buy. He slashed his price target to $10 from $16, with the new target implying about 13% downside from current levels.
Although Korea-based partner SK Group has upsized and extended its order with Bloom Energy, “there has been little else tangible to support an acceleration,” Dumoulin-Smith wrote in a note to clients. “A reset of expectations is not priced-in.”
Bloom Energy’s stock dropped 7.3% in morning trading. It slumped 21.9% in January, which would be the stock’s worst monthly performance since it tumbled 23.2% in April 2022.
Dumoulin-Smith also cut his 2024 revenue estimate by 15% to $1.40 billion, and his 2025 forecast by 25% to $1.44 billion. In comparison, the FactSet revenue consensus for 2023 is $1.45 billion, and Wall Street’s expectation is for revenue to grow to $1.75 billion in 2024 and to $2.28 billion in 2025.
He’s also concerned about what the termination of the chief operating officer means for the company, considering that the replacement named was from outside the company.
“The change and timing only adds uncertainty with 4Q23 requiring growth for [fiscal year 2024] consensus and building momentum to FY24,” Dumoulin-Smith wrote. “Management had previously alluded to need to make up ground in the final stretch of 2023 to achieve FY23 targets and set a path for 2024 growth.”
The company is projected to report fourth-quarter results next week, on or around Feb. 8, according to FactSet.
The stock has rallied 18.3% over the past three months, but has plunged 53.7% over the past 12 months. The S&P 500 index
SPX
has run up 20.2% over the past year.
