Fluence Energy is Tuesday's IBD Stock Of The Day, as the renewable energy storage company looks to ride the Inflation Reduction Act (IRA) to profitability in coming months. FLNC jumped Tuesday, clearing an early entry and flirting with an official buy point.
Similar to Tesla's Megapack energy storage business, Virginia-based Fluence Energy engages in grid-scale energy storage products and services. The company is also developing artificial intelligence applications to maximize renewable energy storage solutions. In a joint venture, Siemens and AES founded Fluence Energy is June 2021.
Fluence Energy has not yet posted a profit, but analysts project that will soon change as the Inflation Reduction Act, signed last year by President Joe Biden, is set to be a tailwind for U.S. renewable energy projects in coming years.
In the second quarter, FLNC reported a loss of 14 cents per share. That was less than expected and down from a loss of 31 cents a year ago. Meanwhile, Q2 revenue soared 103% to $698 million.
Wall Street forecasts a loss of 65 cents per share in fiscal 2023. However, analysts expect Fluence Energy to be profitable in fiscal 2024, with full-year earnings of 9 cents per share. Wall Street expects FLNC profits to be $1.44 per share by 2026.
Meanwhile, analysts expect FLNC revenue to grow 60% to $1.92 billion in fiscal 2023 before leaping another 38% in fiscal 2024 to $2.65 billion.
Fluence Energy And The IRA
CEO Julian Nebreda said on May 11 there will likely be projects in the second half of 2023 that are "directly attributable to the Inflation Reduction Act."
The IRA specifically provides approximately $370 billion in clean energy investments, including investment tax credits (ITC) for stand-alone storage. However, executives signaled caution during the recent earnings call.
"We are pleased to see that some of the initial IRA regulations have been released by the U.S. Treasury. However, we're still waiting on the domestic content regulations," Nebreda said during the Q2 earnings call.
"Our 2024 growth expectations remain unchanged irrespective of the final regulations being published," he added. Fluence Energy expects consolidated revenue growth of 35%-40% year over year for fiscal 2024.
Fluence Energy Stock
FLNC popped 6% to 24.50 Tuesday during market trade. Fluence Energy stock broke a downtrend handle Tuesday and is now hovering just below its official 24.87 buy point, according to MarketSmith analysis. FLNC stock did hit 25.28 intraday.
FLNC has advanced 56% since it hit a low of 15.82 on May 4. Fluence Energy stock is up 37% in May and 44% since the end of 2022. On May 11, Fluence Energy reported better-than-expected Q2 2o23 financials and shares jumped around 7%. This came after a run-up of strong volume on the way up in early May around earnings.
Bank of America analyst Julien Dumoulin-Smith recently upgraded Fluence Energy stock to a "Neutral" rating from "Underperform." Dumoulin-Smith also upped the firm's FLNC price target to 26, from the previous 14.
The analyst wrote that the company's Q2 report supports a "better-than-expected profitability ramp through calendar 2024."
The latest upgrade comes after five firms, including Goldman Sachs, increased Fluence Energy stock price targets following second-quarter results.
Fluence Energy stock ranks second in IBD's Energy-Alternative/Other industry group. FLNC has a 79 Composite Rating out of 99. Shares also have an 96 Relative Strength Rating. The EPS Rating for Fluence Energy stock is 55 out of 99.
Tesla stock popped 3.1% to 199.11 Tuesday afternoon, trading just below the 200-day moving average after just clearing that key level intraday. TSLA stock is nearing a 207.89 buy point.
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