Clean tech and green energy sectors are on the cusp of a powerful multiyear growth run. That is the opinion of Morgan Stanley’s 5-star analyst Stephen Byrd who notes that political will is more likely to support the sensible advantages of fresh and renewable energy to create a positive environment for ‘clean and green’ tech over the following few years.
Outlining his view, Byrd writes: “We consider current valuations don’t reflect the long-term robust growth and margin improvement that we see because of this of the IRA, driving our Attractive industry view… We highlight five themes impacting clean tech in 2023: (1) Deal with profitable growth and path to profitability, (2) IRA advantages materializing later than expected, (3) Supply chain easing in battery storage, driving strong growth and improved pricing, (4) Inflationary utility bills and deflationary distributed generation, and (5) Project announcements in green hydrogen.”
Against this backdrop, we have pulled up the most recent scoop on three clean tech, green energy stocks that embody several of Byrd’s themes – and are showing a powerful base for growth in the approaching months. Listed below are the small print, together with comments from Morgan Stanley.
Stem, Inc. (STEM)
We’ll start with Stem, an organization that mixes high-tech AI software with energy storage to create ‘smart’ battery systems. The corporate’s Athena platform is an AI-powered system that optimizes the assorted switches between grid power, on-site power generation, and stored power, allowing Stem’s business customers to understand savings of 10% to 30% on their energy bills. Stem boasts that Athena is essentially the most utilized and most successful optimization platform in its class.
A have a look at some numbers will help to place Stem’s AI power management into perspective. The Athena platform is in use at greater than 200,000 solar sites globally, has greater than 25 gigawatts of solar assets under management – together with one other 2.4 gigawatts of storage assets, and might learn from greater than 1 billion hours of logged runtime data. This all adds as much as a substantial market, which Stem estimates can grow to $1.2 trillion by 2050. In other words, this company is originally of its ramp.
Stem’s last reported financial results, for 3Q22, also back up the theme of growth. The corporate reported record revenues of $100 million for the quarter, hitting the high end of guidance and growing 150% year-over-year. The corporate runs a net loss – but in 3Q22, the web loss moderated y/y from $116 million to $34 million. Stem ended the quarter with $294 million in liquid assets available.
Looking ahead, Stem has loads of reason for optimism. The corporate’s 12-month pipeline, as of the tip of 3Q22, got here to $7.2 billion, a 29% increase year-over-year. This pipeline bodes well for future work projects and revenue. Also looking good for future work is the record contracted backlog, which in Q3 grew 162% y/y to achieve $817 million. These numbers indicate an increasing demand for Stem’s products and expertise.
Taking a look at STEM from an investment angle, Morgan Stanley’s Stephen Byrd lays out a powerful case to purchase this stock. He writes, “We consider improvement in global battery supply, IRA support through a standalone storage ITC, and STEM’s concentrate on driving higher margin software sales positions STEM as a horny energy storage play into 2023. We like STEM’s approach to profitability with its concentrate on recurring software revenue slightly than on storage hardware, which we consider is becoming increasingly commoditized.”
An upbeat stance like that ought to naturally include an upbeat forecast. Piggott rates STEM shares a Buy with a $15 price goal, implying an upside of 46% for the approaching yr. (To look at Byrd’s track record, click here)
Overall, STEM gets a Strong Buy rating from the Wall Street analyst consensus, based on 4 unanimously positive recent reviews. The stock is selling for $10.27 and its average price goal of $16.25 suggests ~58% one-year upside potential. (See STEM stock forecast)
Altus Power, Inc. (AMPS)
The following green energy stock we’re is Altus Power. It is a player within the solar energy ecosystem, where it bills itself as a full-service solar company, offering solar energy solutions for community, industrial, and industrial markets, at any scale. Altus’ solutions include solar energy installations for electrical generation, energy storage, and EV charging, combining the advantages of renewable power with reasonably priced pricing. Altus has generated greater than 2.9 billion kilowatts of solar electricity since getting began back in 2009.
Altus is at all times trying to expand its power generation capability, and to further that, the corporate has a record of smart acquisitions. This past December, Altus announced a $293 million agreement under which it acquired 220 megawatts of solar assets – each existing and under construction – from True Green Capital Management. And earlier this month, Altus announced a brand new financing agreement under which it increased its credit facility to $141.3 million. This expanded credit can be used to optimize the portfolio assets it recently acquired from D.E. Shaw Renewable Investments.
In its most up-to-date quarterly report, 3Q22, Altus showed a quarterly increase in its energy generation capability of 100 megawatts. The corporate had revenues of $30.4 million, a y/y gain of 51%. Altus’ quarterly net loss, by GAAP measures, got here in at $96.6 million – but the corporate’s $290 million in money available was enough to fund the True Green acquisition.
Stephen Byrd lays out the Morgan Stanley view of Altus, with several points indicating why this stock ought to be attractive for investors. Listing those points, Byrd states, “We consider AMPS will proceed to function a market-leader in C&I distributed solar development, which is poised to grow significantly, supported by (i) rising utility bills, (ii) rising grid instability, (iii) customer demands for price certainty (i.e., not exposed to fluctuating power prices), and (iv) corporate decarbonization goals.”
Looking ahead for the stock, Byrd rates it an Chubby (i.e. Buy), with a $12 price goal to point potential for an upside of 47% this yr.
Overall, the bulls are definitely running for AMPS; the stock has 6 recent analyst reviews, they usually are all positive – for a unanimous Strong Buy consensus rating. The stock is priced at $8.14, and its $12 average price goal is in keeping with the Morgan Stanley view. (See AMPS stock forecast)
Bloom Energy (BE)
Last but not least is Bloom Energy, a clean-tech energy firm focused on the intersection of energy storage and energy generation. Bloom offers an industry-leading platform for electric power generation and storage through solid oxide fuel cells. These are another technology to existing battery systems or fossil fuels, and produce power through electrochemical conversion. Solid oxide fuel cells have the dual benefits of low emission power generation and comparatively high efficiency.
For the green conscious power consumer, Bloom’s technology offers several other benefits, as well. The corporate’s fuel cells are at all times ready for power generation, allowing for a highly resilient backup to grid power. The fundamental by-product of the fuel cells’ operation is just hydrogen, which itself be captured to be used as a fuel. The corporate’s customer base includes such major names as FedEx, Honda, Google, and Comcast.
Bloom’s quarterly results tent to be somewhat volatile, with peaks coming in Q4. Within the last reported results for 3Q22, Bloom showed a top line of $292.3 million, up 41% year-over-year and an organization record for total quarterly revenue. At the underside line, the GAAP EPS was a lack of 31 cents, a comparatively flat y/y.
Taking a look at the stock’s performance, we are able to see that Bloom Energy shares climbed ~47% over the past 12 months.
Morgan Stanley’s Byrd notes several details that would bolster Bloom’s shares further in 2023. He writes, “We consider BE will profit significantly from several key trends in 2023 including: (i) the growing ‘economic wedge’ or value proposition of distributed energy (i.e., fuel cells for C&I customers), (ii) rising grid instability, (iii) grid capability limitations, and (iv) the $3/kg hydrogen tax credit included within the IRA.”
“We see a powerful setup into 2023 as the corporate gains operating leverage from its Fremont manufacturing facility, and rising utility bills and grid instability, driving continued demand for its fuel cell applications,” the analyst added.
In Byrd’s view, this justifies an Chubby (i.e. Buy) rating, and his price goal, of $35, implies the stock will gain 47% over the following 12 months.
All in all, Bloom Energy gets a Strong Buy consensus rating from the Street’s analysts, based on 9 recent reviews that include 7 to Buy and a couple of to Hold. The shares have a median price goal of $30.22, suggesting a gain of ~27% from the present share price of $20.22. (See Bloom stock forecast)
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Disclaimer: The opinions expressed in this text are solely those of the featured analysts. The content is meant for use for informational purposes only. It is extremely essential to do your personal evaluation before making any investment.