Bloom Energy (BE, Financial) shares have experienced a significant surge, climbing 17.74% in value, as J.P. Morgan upgraded its rating to "overweight" with a price target of $33. This bullish outlook is attributed to the retention of 48E tax credits, which are anticipated to improve profit margins and stimulate further growth in the deployment of Bloom's fuel cell systems.
According to J.P. Morgan, the enhancement in financial performance due to these tax credits is expected to manifest in Bloom Energy's fiscal results beginning in 2026. However, there is potential for the company to issue favorable guidance updates sooner, possibly aligning with its Q2 earnings report.
Currently, Bloom Energy's stock is valued at $28.61, suggesting room for growth towards the target price. Despite the promising outlook, investors should be aware of certain risk factors highlighted in the company’s financials. The Altman Z-score of 0.94 classifies the company in the distress zone, indicating a potential risk of bankruptcy within two years. The stock is also rated as "Significantly Overvalued" according to the GF Value, with a GF Value standing at $18.75.
Bloom Energy's financial performance shows a Piotroski F-Score of 7, suggesting robust financial health, and a Beneish M-Score of -2.77, implying a low likelihood of earnings manipulation. However, the Return on Invested Capital (ROIC) is recorded at 2.37%, below the weighted average cost of capital (WACC) of 19.31%, indicating potential inefficiencies in capital usage.
The company faces certain financial hurdles, with severe warning signs such as an increasing Days Sales Outstanding and Days Inventory, suggesting challenges in payment collection and inventory management. Although Bloom Energy presents promising opportunities, it's vital for investors to weigh these risks against the potential rewards.
