Analyst Stephen Byrd at Morgan Stanley raised his price target on Bloom Energy stock to $32 a share from $25 per share, one day after the company announced a massive deal.
On Oct. 25, Bloom Energy signed a contract with South Korea's SK Group's affiliate, SK Ecoplant to sell at least 500 megawatts of fuel cells between 2022 and 2025. That could generate equipment and service revenue worth a whopping $4.5 billion over the period for Bloom Energy. SK Ecoplant will also invest $500 million in Bloom Energy in the form of preferred stock, which the latter plans to use to commercialize its hydrogen solutions and strengthen its balance sheet, among other things. The two companies also plan to set up hydrogen innovation centers in the U.S. and South Korea.
With the deal in place, Byrd's revenue estimate for Bloom Energy between 2022 and 2024 has gone up by $300 million per year versus his previous projection, and he has raised his price target on the stock to $32 a share. Bloom Energy closed Tuesday trading at around $28 a share.
With economies across the globe striving to switch to clean energy, interest in hydrogen fuel is visibly on the rise. Bloom Energy is a key player in the hydrogen space with a niche offering: Its on-site energy servers are built on solid-oxide fuel cells that can convert hydrogen and natural gas into electricity to provide uninterrupted power supply.
Bloom Energy, however, is still losing money, but its latest deal with SK Ecoplant has made investors hopeful about the company's ability to turn profitable. That, coupled with Morgan Stanley's bullish views, drove the stock even higher Tuesday.