STEM - Stem started at Buy at Janney seeing strong upside if financial targets met

2023-06-06 14:28:36 ET

Stem ( NYSE: STEM ) +5.7% in Tuesday's trading as Janney initiated coverage with a Buy rating and $12 price target, seeing significant upside potential if management can execute on the company's 2025 financial targets, as the stock appears to be significantly discounting software/services guidance or pricing in additional capital needs.

Stem ( STEM ) management has promised positive adjusted EBITDA in H2 2023, so the company's ability to deliver on this promise is an important step in regaining investor trust, Janney analyst Sean Milligan said.

Within the services/software segment, ~12% of the company's FY 2023 revenues, Stem ( STEM ) generates revenue from the sale of software to the battery energy storage segment and solar segment; Stem expects to grow the segment at a 65%-85% compound annual growth rate through 2025 as the company attaches Athena to battery energy storage asset sales and delivery non?storage sales, according to Milligan.

More on Stem:

• Financial and valuation comparison to sector peers
• Analysis: Stem: Shortsighted Shorts
• Stock price return: Down 30.5% YTD, down 36.5% in the past 12 months

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