Bloom Energy (BE.US) downgraded by Jefferies Financial Group Inc. Overvaluation and challenging growth prospects lead to a sharp decline in stock price of over 10%.

Bloom Energy (BE.US) stock plummeted on Wednesday, falling as much as 16.5% before closing down 10.6% on Wednesday. Prior to this, Jefferies Financial Group Inc. downgraded the stock from "hold" to "underperform" and set a target price of $31, citing unclear growth prospects beyond 2026 and signs of "early overoptimism". The analyst team at Jefferies Financial Group Inc., led by Dushyant Ailani, acknowledged that Bloom Energy is indeed positioned as a leader in a promising niche market, but many of its optimistic growth assumptions are facing real constraints. The stock's current valuation implies a 31x EBITDA multiple for fiscal year 2027, which is already pricing in high growth expectations, with downside risks outweighing further upside potential. In their report, the analysts wrote, "A 30x multiple is hard to justify when the growth path beyond 2027 is unclear." They pointed out that even with more reasonable multiples, achieving the corresponding business scale "seems incredibly challenging" - the biggest point of contention being the speed at which the company is signing orders: "As management has previously stated, securing large orders takes time. We are not underestimating Bloom Energys ability to eventually achieve a business scale of over 1 gigawatt, but it is difficult to see this goal materializing in the short term." Jefferies Financial Group Inc. believes that apart from substantial order data, the stock's next potential catalyst will come on February 26th when Bloom Energy will disclose its order backlog. However, "until then, we remain skeptical of the stock's support levels."