On Thursday, Susquehanna adjusted its financial outlook for Stem Inc. (NYSE:STEM), a smart energy storage company, by reducing the price target to $4 from the previous $5.50. The firm maintains a Positive rating on the stock despite the company's fourth-quarter revenue falling short of expectations.
Stem Inc. reported a fourth-quarter revenue of $167 million, which did not meet the guidance figures and was significantly lower than anticipated due to project delays caused by ongoing interconnection and permitting issues. This shortfall in revenue was a primary factor in the company's earnings per share (EPS) dropping to a loss of $0.24, which was $0.07 below forecasts.
Despite the revenue and EPS miss, Stem Inc. achieved positive adjusted EBITDA, a measure of profitability, and reported non-GAAP gross margins that aligned with Susquehanna's predictions.
Operating costs also came in better than expected, contributing to the company's achievement of generating positive adjusted EBITDA during the quarter.
Looking forward, Stem Inc. has provided a fiscal year 2024 revenue guidance that is softer than expected, coming in 10% below Susquehanna's prior estimates. However, there is a possibility for upside potential through the timing of large front-of-the-meter (FTM) deals and by accelerating the conversion of contracted annual recurring revenue (CARR) to actual annual recurring revenue (ARR).
In a positive light, at the start of the year, Stem Inc. signed software-only deals amounting to 800 megawatt-hours (MWh). This indicates a continued demand for the company's energy storage solutions, which could contribute to future financial performance.
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