Bloom Energy ‘s recent retreat has created a buying opportunity, JPMorgan said. Analyst Mark Strouse upgraded the electricity and hydrogen producer’s stock to overweight from neutral. He cut $2 from his price target to $20. Still, Strouse’s new target implies the stock could rally 46.5% from where it closed Thursday’s session. Shares gained 5.2% in premarket trading. But, the stock has lost about 28.6% since 2023 began and has lost more than 40% since its downturn began in mid-February. Before the move down, the stock rallied along with the broader market for the first month-and-a-half in 2023. “We believe the recent pullback … is overdone and that investors can take advantage of the volatility to add to positions in a stock that we believe will be a long-term beneficiary of the energy transition,” he said in a note to clients Friday. BE YTD mountain Bloom Energy He did note that the company gave lackluster EBITDA margins when reporting first-quarter earnings. However, Strouse said that should be seen as driven by higher-than-expected operating expenses and that gross margins have looked encouraging over the past few years and do again this year. Additionally, he said Bloom Energy’s balance sheet is strong, which can provide comfort in the current market environment. Taken together, Strouse said the improving gross margins and balance sheet will allow growth-focused investments to continue being made. Strouse also said the company’s analyst day event at the New York Stock Exchange scheduled for Tuesday could be a positive catalyst. Any contract announcements, updates on efficiency improvements at a California facility or details on how the company will be impacted by the Inflation Reduction Act could also serve as positive catalysts, he said. To be sure, he noted a comeback could be impacted by any resource constraints, government policy changes, increases to gas costs or more competition. — CNBC’s Michael Bloom contributed to this report.
