Bloom Energy's Pullback Is the Entry Point Long-Term Investors Wanted
Key Points
The stock is down 37% from its all-time high despite its strongest earnings report yet.
Bloom Energy is set to triple revenue over the next two fiscal years.
The stock has fallen, but the business has arguably never looked stronger.
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Bloom Energy (NYSE: BE) has lost about 37% of its value since hitting an all-time high just a few weeks ago. It was trading at around $345 a share then -- and it's at about $218 now.
Normally, a steep decline of that caliber would tell you something went wrong with Bloom's business. In the case of the hydrogen stock, however, the opposite is the case.
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Indeed, the company's most recent earnings report was arguably its strongest yet. Bloom raked in over $1 billion in revenue, marking its first billion-dollar quarter in company history, and both margins and profitability improved significantly. To top it off, management raised 2026 revenue guidance (again) into the range of $3.9 billion to $4.2 billion.
Image source: Bloom Energy.
What's more, Wall Street expects Bloom's revenue to more than triple over the next two years, as the artificial intelligence (AI) boom will likely fuel stronger demand for its solid oxide fuel cell systems.
Data by YCharts.
Bloom looks pricey on a trailing basis -- trading at about 24 times sales -- but considerably less expensive when valued against the revenue forecasts in the chart above. If analysts are right, the stock trades at roughly 11 times next fiscal year's expected sales.
The average price target for Bloom is about $274, about 25% above its current share price of $220. That isn't guaranteed upside -- it's just Wall Street's opinion -- but it shows how bullish analysts are today.
If there's data center growth in the future, then there's a big opportunity for Bloom to keep growing. Since we're still just in phase one of AI, buying Bloom at today's relatively lower price could be the entry point long-term investors have been waiting for.
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Steven Porrello has positions in Bloom Energy. The Motley Fool has positions in and recommends Bloom Energy. The Motley Fool has a disclosure policy.
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