Most developed countries are focusing on decarbonization and are shifting to energy storage technologies to reduce their carbon footprints. Investments in renewable energy are expected to grow by 25% in the United States through 2022 because the private and public sectors are committed to addressing climate change concerns. Also, the Democratic party is urging President Biden to move ahead with the climate change part of his proposed Build Back Better bill, which includes $555 billion in climate change investments. The bill has been stalled in the Senate for more than a month.

The surge in growth in the energy storage market is driven by increased demand for peak load management, grid balancing, and innovation in energy storage technologies owing to the recent and ongoing digital transformation. According to a report from Acumen Research and Consulting, the Energy Storage as a Service Market is projected to reach more than $2.62 billion by 2028, with a 9.8% CAGR.

Given these factors, Wall Street analysts expect energy storage stocks Stem, Inc. (STEM), Fluence Energy, Inc. (FLNC), and Eos Energy Enterprises, Inc. (EOSE) to gain momentum in the coming months.

Stem, Inc. (STEM)

San Francisco-based STEM provides smart battery storage solutions. The company’s energy software, Athena, is an AI-powered analytics platform that uses artificial intelligence and machine learning to optimize energy use by automatically switching between battery power, onsite generation, and grid power. STEM’s solutions include energy storage, wholesale energy markets, microgrids, utility bill optimization, and commercial electric vehicle charging.

Last week, STEM acquired Also Energy Holdings, Inc. With the acquisition, the company added 32.85 gigawatts (GW) of solar assets under management in more than 50 countries. The acquisition is expected to boost STEM’s growth, enhance its margins, and accelerate its expansion as a global provider of clean energy intelligence and optimization solutions.

Also in January, STEM entered a co-marketing agreement with ENGIE North America to enable broad adoption of eMobility solutions for schools, transit agencies, and commercial fleets throughout the U.S. through the integration of Athena software with ENGIE’s electric vehicle (EV) charging solution. This integrated offering might open growth opportunities for the company and boost its revenue streams.

STEM’s revenue increased 334.3% year-over-year to $39.83 million in its fiscal third quarter, ended Sept. 30, 2021. The company’s gross margin grew 580% year-over-year to $5.80 million in the to-be-reported quarter. STEM’s net income grew 715.4% year-over-year to $115.61 million. And the company’s net income per share attributable to common shareholders increased 280.9% year-over-year to $0.85.

The $360.87 million consensus revenue estimate for the fiscal year 2022 represents 144.7% year-over-year growth. Analysts expect the company’s EPS to rise 79.1% year-over-year in its fiscal year 2022.

Over the past five days, the stock has increased 0.5% in price to close yesterday’s trading session at $11.38.

Each of the two Wall Street analysts that rated STEM rated it Buy. The 12-month median price target of $40.50 indicates a 255.9% potential upside. The price targets range from a low of $35.00 to a high of $46.00.

Fluence Energy, Inc. (FLNC)

FLNC is a leading provider of energy storage products and services, and artificial intelligence-enabled digital applications for renewables and storage applications in the U.S. and worldwide. The Arlington, Va., company’s offerings include energy storage products and services, recurring operational services, and digital solutions for energy storage and power assets. The company’s offerings serve utilities, developers, commercial and industrial customers.

Earlier this month, FLNC partnered with Pexapark, a software and advisory services provider for renewable energy sales and risk management, to make Pexapark’s suite of analytical tools and services available to customers through Fluence IQ digital ecosystem. With this partnership, FLNC is expected to increase its revenue potential by providing advanced energy storage solutions.

Last month, FLNC collaborated with QuantumScape to incorporate the latter’s solid-state lithium-metal battery technology into Fluence stationary energy storage applications. FLNC might enhance its market growth and boost revenues with this significant technological advancement.

In its fiscal year 2021 fourth quarter, ended September 30, FLNC’s total current assets increased 102% over nine months ended Sept. 30, 2021, to come in at $661.52 million. Its  total assets grew 97.1% over nine months to $717.68 million.

The $1.21 billion consensus revenue estimate for its fiscal year 2022, ending Sept.30, 2022, represents 77.7% year-over-year growth.

The stock has declined 56.5% in price year-to-date. However, FLNC’s 12-month median price target of $44.45 indicates a 187.3% potential upside from yesterday’s closing price of $15.47. The price targets range from a low of $34.00 to a high of $52.00. Among the 13 Wall Street analysts that rated FLNC, 10 rated it Buy, while three rated it Hold.

Eos Energy Enterprises, Inc. (EOSE)

Edison, N.J.-based EOSE designs, manufactures, and markets battery storage solutions for the electric utility industry in the U.S. The company’s flagship product is the Eos DC battery system, with both front-of-the-meter and behind-the-meter applications. It is designed to meet a range of requirements in the battery storage industry, including large grid-scale energy storage projects, storage projects, commercial and industrial projects.

Last December, EOSE signed a strategic term sheet with Tetra Technologies, Inc. to support the manufacturing of Eos’ innovative Znyth aqueous zinc battery and batter’s improved performance. EOSE is projected to expand its manufacturing capacity to 800 MWh in 2022. This strategic collaboration is expected to enable supply chain continuity and optimize sourcing the growing stationary storage market. This might boost EOSE’s revenue streams.

EOSE’s total revenue increased 1951.4% year-over-year to $0.72 million in its fiscal third quarter 2021 ended Sept. 30, 2021. The company’s cash and cash equivalents increased 18.3% over nine months ended Sept. 30, 2021, to come in at $144.19 million. EOSE’s total assets grew 37.5% over nine months to $190.08 million.

Analysts expect EOSE’s revenue for its fiscal fourth quarter, ended December 31, 2021, to come in at $3.35 million, representing a 1665.4% rise year-over-year.

EOSE declined 54.9% year-to-date. However, FLNC’s 12-month median price target of $20.50 indicates a 504.7% potential upside from yesterday’s closing price of $3.39. Analysts’ price targets range from a low of $20.00 to a high of $21.00. Of the three Wall Street analysts that rated EOSE, two rated it Buy, while one rated it Hold.

STEM shares were trading at $11.67 per share on Monday morning, up $0.29 (+2.55%). Year-to-date, STEM has declined -38.48%, versus a -5.30% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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