Bloom Energy (BE, Financial) saw its stock price surge by 18.15%, reaching its highest point since January. This significant movement was driven by JPMorgan upgrading the company's stock rating from neutral to overweight, with a substantial target price increase of 83% to $33, up from $18.
The core reason for this upgrade is the recent inclusion of fuel cells in the U.S. "Beautiful Act," which offers clean energy investment tax credits. This policy is expected to significantly boost Bloom Energy's revenue and profit margins starting in fiscal year 2026.
JPMorgan analyst Mark Strauss highlighted that the tax credit policy enhances Bloom Energy's pricing power in negotiations with data center clients and stimulates demand from price-sensitive non-data center customers. Despite potential impacts from a recent executive order, the gas turbine market's high prices and extended delivery cycles make fuel cells an attractive alternative, likely increasing overall order volumes.
The inclusion in the 48E tax credit system is expected to steepen Bloom Energy's growth trajectory, with projected revenue growth of 19% by fiscal year 2025. This growth is attributed to enhanced pricing power with data center clients and an expanded price-sensitive customer base.
Additionally, improved capacity utilization and cost management are anticipated to support Bloom Energy's product gross margins, laying a foundation for long-term profitability improvement.
