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. The Bloom Energy Server provides extremely reliable and affordable  power to its customers across industries.

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

• The company has logged a 21.6% YoY rise in revenue to $228.5 million against $187.9 million in Q2FY20 with product revenue recording a significant growth of 26.4% YoY supported by a 41.5% rise in acceptances.
• It witnessed an improvement in its gross margin to 16.3% in Q2FY21 from 14.0% in Q2FY20, 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.

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

Recent Update

• Attained Vital Milestones: On 30 July 2021, the company in conjunction with Samsung Heavy Industries (SHI) 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 got verification from the American Bureau of Shipping’s (ABS) New Technology Qualification (NTQ) service as an alternative power source for vessels.
• Developing of Market for Certified Low-Methane Natural Gas: As per the press release dated 29 July 2021, the company will change its whole global natural gas fleet to certified low-leak natural gas to curb harmful methane emissions from upstream gas production. Further, it will associate with MiQ to undertake the task of testing and refining elements of the certified gas marketplace and make aware its customers and other industry stakeholders about the step towards reducing the environmental impacts of natural gas production.
• Collaboration with Heliogen: As per the press release dated 22 July 2021, the company along with Heliogen declared to generate green hydrogen through the usage of only concentrated solar power and water. This step will further fast-track the world’s progress towards a zero-carbon future.

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 taking into consideration the stock-based compensation.

The management is confident about growth prospects  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 continuous focus on innovation.

Key Risks

The company’s operations are exposed 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 some other potential risks.

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

Technical Overview:

Chart:

Source: REFINITIV

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

Stock Recommendation

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and  a target price that reflects a rise of low double-digit (in % terms) has arrived. A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average) considering its better 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 “Buy” recommendation on the stock at the current market price of $22.02 per share, up by 0.55% on 2^nd September 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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