Bloom Energy Corporation

BE Details

Bloom Energy Corporation (NYSE: BE) deals in the business of providing clean, reliable, and affordable energy and for this, it has developed an energy server platform. It’s Bloom Energy Server provides extremely reliable and resilient power to its customers across industries.

Q1FY21 Results Performance (For the Period Ended 31 March 2021)

Spike in Revenue: The company has reported a 23.8% YoY rise in revenue to $194.0 million as against $156.7 million in Q1FY20 mainly driven by product revenue which grew significantly by 38.5% YoY supported by a 40.2% rise in acceptances to 359, or 35.9 MW.

Increase in Gross Margin: The company witnessed a significant improvement in its gross margin to 28.2% in Q1FY21 from 12.7% in Q1FY20, mainly assisted by an uptick in product gross margin to 36.7% from 27.2%.

Preliminary Summary GAAP Profit and Loss Statements (Source: Company Reports)

Launched Energy Efficient Electrolyzer

Bloom Electrolyzer to Produce Lowest Cost Clean Hydrogen: The company recently, on 14 July 2021,  launched the most energy-efficient electrolyzer - Bloom Electrolyzer. This is likely to produce the lowest-cost clean hydrogen through electrolysis that will be 15 to 45% more efficient than other prevailing products in the market.

Shipment: The company has started accepting orders for the Bloom Electrolyzer and the commercial shipments are anticipated to commence in  2022.

Foray into Combined Heat and Power (CHP) Project

Installation of New 4.2-Megawatt Utility-Scale CHP: BE, on 21 July 2021, announced its first Combined Heat and Power  (CHP) project in association with SK ecoplant for a new 4.2-megawatt utility-scale CHP installation. This installation also marks South Korea’s first-ever utility-scale solid oxide fuel cell (SOFC) CHP initiative and it will utilise BE’s SOFC technology configured in an innovative Power Tower format.

Construction Work to Start in 2021: Meanwhile, the construction is likely to commence later in 2021.

Signed Agreement with Idaho National Laboratory to Produce Hydrogen through Nuclear Energy

Agreement with Idaho National Laboratory: The company, on 18 May 2021, declared that it has entered into an agreement with Idaho National Laboratory to produce clean hydrogen through the usage of its solid oxide, high-temperature electrolyzer that is powered by nuclear generation.

Outlook

Confidence in Guidance: The company has reaffirmed its 2021 guidance wherein it expects to achieve revenue in the range of $950 million - $1 billion. It also expects to achieve a non-GAAP gross margin of ~25% in FY21 and a non-GAAP operating margin of around 3% in FY21, without taking into consideration the stock-based compensation.

Meanwhile, the company is set to release its Q2FY21 earnings on August 4, 2021.

Key Risks

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

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

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price that reflects a rise of low double-digit (in % terms). We have assigned a slight premium to EV/Sales Multiple (NTM) (Peer Average) considering its accelerating revenue as well as margins and record acceptances in Q1FY21. The stock of the company rose by ~16.5% in 1 year. It has made a 52-week low and high of $11.63 and $44.95, respectively.

Considering the aforementioned factors along with its healthy liquidity position, investment in clean energy solutions, and decent outlook, we give a “Buy” recommendation on the stock at the current market price of $21.81 per share, down by 3.28% on 22^nd July 2021.

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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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