Bloom Energy Shares Rise After Upgrade From Mizuho Securities

Bloom Energy (NYSE: BE) has captured investor attention after Mizuho Securities upgraded its rating to Outperform on May 5, 2025, citing a compelling risk/reward profile and accelerating demand for its clean energy solutions. The firm’s $26 price target reflects optimism about Bloom’s ability to capitalize on infrastructure bottlenecks and shifting power market dynamics.

The Case for Bloom: Tech, Timing, and Turnaround

Mizuho’s upgrade hinges on three pillars: Bloom’s technology edge, its financial turnaround, and the structural tailwinds reshaping the power sector.

1. Why Bloom’s Tech Wins

Bloom’s solid oxide fuel cell (SOFC) systems offer a faster, lower-emission alternative to conventional power sources like combined cycle gas turbines (CCGTs). Unlike CCGTs, which take 4–7 years to deploy, Bloom’s modular systems can be installed in months. This speed is critical as U.S. grid infrastructure faces delays—some states are 11 years behind on transmission upgrades—forcing utilities and large industrial customers to seek distributed power solutions.

A 15-year deal with AEP-Cologix in Ohio exemplifies this shift. The partnership, which could extend until 2040, highlights Bloom’s growing traction with data centers and industrial operators. Mizuho notes that such long-term contracts are increasingly attractive as AI-driven workloads and climate regulations drive demand for reliable, low-carbon energy.

2. Financial Momentum

Bloom’s first-quarter results underscore its operational progress:
- Revenue hit $326 million, up 39% year-over-year, marking a record Q1.
- Gross margin surged to 28.7%, a 1,000 basis-point improvement from 17.5% in 2024.
- Non-GAAP EPS turned positive for the first time in Q1 history, at $0.03.

The company reaffirmed its 2025 guidance of $1.65–$1.85 billion in revenue and ~29% gross margins, despite U.S. tariff headwinds. Management mitigated tariffs via strategies like USMCA-compliant suppliers and component reclassification, proving its ability to navigate regulatory hurdles.

3. Risks and Reality Checks

While optimism is high, challenges remain:
- Tariff drag: Tariffs could reduce margins by 100 basis points, though mitigation efforts are underway.
- Supply chain and policy risks: Delays in project timelines—due to bottlenecks or regulatory shifts—could disrupt revenue.
- Geographic limits: International expansion is minimal, with Korea being a small but key market.

Valuation: A Growing Multiple?

Mizuho argues Bloom’s NTM EBITDA multiple could expand toward levels seen by peers like GEV, if large customer deals materialize. Analyst consensus targets average $24.42, implying a 45.78% upside from the May 5 price of $16.75. GuruFocus’ one-year valuation of $21.41 further supports this bullish stance.

Conclusion: Betting on Bloom’s Asymmetric Upside

Bloom Energy’s upgrade by Mizuho isn’t just a ratings call—it’s a bet on structural shifts in the power sector. With utilities and industries racing to decarbonize and avoid grid dependency, Bloom’s SOFC technology is positioned to fill critical gaps.

The $26 price target, while trimmed from $28, reflects a cautious optimism: even a partial win in securing major utility or data center contracts could unlock significant value. Meanwhile, the 28.7% gross margin and positive Q1 EPS mark a turning point in the company’s financial trajectory.

Investors should note that Bloom isn’t without risks—tariffs, supply chain hiccups, and geographic constraints are real. Yet, with $1.85 billion in potential 2025 revenue and a customer base spanning data centers, industrials, and utilities, the company’s diversification offers resilience.

For contrarian investors, the current price at $16.75 sits far below both Mizuho’s target and consensus estimates. As AI workloads and climate mandates drive energy innovation, Bloom’s mix of proven tech and scalable solutions makes it a compelling play in a $1.8 trillion global energy infrastructure market. The upgrade isn’t just about today—it’s about who will power tomorrow.