Bloom Energy Corporation

BE Details

Bloom Energy Corporation (NYSE: BE) provides clean, reliable, and affordable energy and for this, it has developed an energy server platform. The company’s server provides extremely reliable and resilient power to its customers across industries.

Q2FY21 Results Performance (For the Period Ended 30 June 2021)

• Increase in Revenue: The company has recorded a 21.6% YoY rise in revenue to $228.5 million, mainly led by a $30.7 million (up 26.4% YoY) rise in product revenue and a $9.5 million rise in service revenue
• Increased Gross Margin: The company witnessed an improvement in its gross margin to 16.3% in Q2FY21 from 14.0% in Q2FY20, mainly strengthen by improved product cost and favorable sales mix.
• Net loss stood at -$58.11 million in Q2FY21 as against -$42.51 million in Q2FY20

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

Recent Update

Attained Vital Milestones: On 30 July 2021, the company declared that it in conjunction with Samsung Heavy Industries (SHI) has bagged Approval in Principle (AiP) from DNV, a premier international maritime classification society for the initial design for an engineless, fuel cell-powered liquefied natural gas (LNG) carrier. Further, it has also received verification from the American Bureau of Shipping’s (ABS) New Technology Qualification (NTQ) service as an alternative power source for vessels.

Outlook

• Confidence in Guidance: The company has reaffirmed its FY21 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.
• Poised for Growth: The management is self-assured for growth in its business considering the advancement it has made in deploying its products as well as the demand, investment in its technology and infrastructure and continued focus on innovation.

Key Risks

The company’s operations are exposed to global economic conditions and uncertainties in the geopolitical environment where it operates. 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 Relative Strength Index (14-Period)

Stock Recommendation

The stock has delivered 6-month and 9-month returns of ~-35.9% and ~+15.8%, 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, which indicates a good opportunity for accumulation.

The stock has been valued using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight premium to its peers’ average, considering strong order execution as well as record revenue and acceptances in Q2FY21. Further, it continues to make strides on its operational and financial milestones.

Considering the aforementioned factors along with its healthy liquidity position, and decent outlook, we give a “Speculative Buy” recommendation on the stock at the current market price of $19.56 per share, down by 4.35% on 19^th August 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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