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 resilient 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 growing significantly by 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.

Consolidated Income Statement (Source: Company Reports)

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 self-assured for growth in its business considering increased demand, the advancement it has made in deploying its products,  investment in its technology and infrastructure, and continuous focus on innovation.

Key Risks

The company’s operations are exposed to risks of 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: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method 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 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 $18.99 per share, down by 1.76% on 16^th 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.

Disclaimer

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