Bloom Energy (BE 5.17%) investors finally caught a break this afternoon. Two days ago, The Wall Street Journal published a critique on Bloom, explaining how the company attempted to disrupt the power grid by offering energy users the option of producing their own power on-site, but ended up getting disrupted itself when cheaper, more efficient forms of distributed energy production emerged.
Bloom stock sank 18% in response to that article, and at first appeared poised to go lower again today, sinking 5% in early trading. But then it recovered, finishing the day up 3%, and investment bank Johnson Rice had something to do with that.
In a note just 15 words long, TheFly.com reports that Johnson Rice initiated coverage of Bloom stock yesterday, about 20 minutes after Bloom shares had closed down heavily. There's little detail on precisely why Bloom won Johnson's favor, although the fact that the stock was suddenly 18% cheaper probably had something to do with it.
Whatever the reason, Johnson Rice now rates the stock "accumulate," with a $32 price target implying there could be as much as 23% upside in the shares.
Is Johnson Rice right about that? On the one hand, Bloom is the only fuel cell stock to have generated appreciable free cash flow from its business anytime in recent memory (about $113 million last year).
On the other hand, 2020 hasn't been as kind to Bloom. Through the first nine months of this year, it has already burned through $113 million in negative free cash flow. And in contrast to all its renewable energy peers (Plug Power, FuelCell Energy, and Ballard Power), Bloom's sales through the first three quarters of this year are actually down about 5% in comparison to last year.
So although Bloom stock is cheaper today than it was a few days ago, maybe it deserves to be.