What happened
Mere days before it's scheduled to publish its latest set of quarterly results, Stem (NYSE: STEM) got a boost from an analyst. The next-generation clean energy storage specialist's stock was lifted by the move, rising by more than 16% week to date as of Friday before market open, according to data compiled by S&P Global Market Intelligence.
So what
That analyst was Jon Windham of UBS, who on Tuesday initiated coverage of Stem stock.
Windham is very bullish on the company, tagging it with a buy recommendation at a price target of $19 per share. Even after the shares bumped up on the news, that level still implied upside of over 40% on the stock's current price.
There are several key reasons backing the UBS prognosticator's unbridled optimism. He's cheered by Stem's leading position in the commercial storage market, which is growing at impressive rates. He also feels that the government's recently passed Inflation Reduction Act will handsomely benefit Stem, as it makes qualifying energy storage assets eligible for the federal investment tax credit.
Now what
Stem is a young company, and like many young companies -- particularly those with a sharp tech focus -- it habitually loses money. Windham doesn't see this trend lasting, though, and he believes Stem will start turning the corner in the very near future. He's modeling a flip into positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in the second half of 2023.
Investors will soon get a fresh set of figures to help determine if the company is indeed heading down a path to profitability. Stem is slated to unveil its third-quarter results next Thursday, Nov. 3.
10 stocks we like better than Stem, Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Stem, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 30, 2022
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Stem, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
