Bloom Energy Corporation

BE Details

Bloom Energy Corporation (NYSE: BE) deals in providing 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 Period Ended 30 June 2021 (Q2FY21)

• The revenue increased 21.6% YoY to $228.47 million, primarily driven by a significant rise in product revenue by 26.4% YoY supported by a 41.5% rise in acceptances.
• It improved its gross margin to 16.3% in Q2FY21, mainly assisted by improved product cost and favourable sales mix.
• It reported a GAAP EPS of -$0.31 and adjusted EPS of -$0.23 in Q2FY21 against a GAAP EPS of -$0.34 and adjusted EPS of -$0.23 in Q2FY20 due to lower interest expenses amid the benefit of refinancing of its notes at a lower interest rate in 2020 and a rise in outstanding shares.

Income Statement (Source: Company Reports) 

Recent Update

• On 29 September 2021, the company declared the commercial availability of its Hydrogen Energy Servers - full hydrogen-powered fuel cells. The company has started accepting orders, and retail delivery is likely to commence in 2022.

Outlook

The company has reaffirmed its guidance for 2021, 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 considering the stock-based compensation.

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

Key Risks

The company’s operations will be 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)

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Stock Recommendation

The company has delivered 6-month and 9-month returns of ~-20.57% and ~-44.62%, respectively. The stock is trading lower than the average of the 52-week high price of $44.95 and the 52-week low price of $12.37.

The stock is valued using an EV/Sales multiple-based illustrative relative valuation, and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average), considering its better execution and record revenue in Q2FY21. Further, it continues to make strides on its operational and financial milestones.

Considering the factors above, along with its healthy liquidity position and decent outlook, we give a “Speculative Buy” recommendation on the stock at the closing market price of $19.15 per share, down 0.05% as of 8^th October 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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