On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its stock price target on shares of ESS Inc. (NYSE:GWH) to $1.40 from $2.00, while keeping a Hold rating on the stock. The firm's analyst cited the company's fourth-quarter results and a business update as the basis for the revision.
ESS Inc. reported fourth-quarter revenue of $2.8 million, which fell short of both Deutsche Bank's estimate of $4.2 million and the consensus estimate of $3.5 million, as well as the implied guidance of $4.3 million.
The lower revenue was attributed to approximately $2 million in delayed revenue from Honeywell (NASDAQ:HON) and ESI, which is now anticipated to be recognized in the first quarter of 2024. Although the revenue did not meet expectations, ESS Inc.'s EBITDA loss of $19 million was better than the predicted loss of $22 million, and its adjusted EBITDA loss of $13 million exceeded the consensus estimate of a $15 million loss.
Looking ahead to 2024, ESS Inc. has announced plans to reduce the cost of its Energy Warehouse by 40% through design simplification, aiming to achieve non-GAAP gross margin profitability in the second half of the year.
While the company did not provide specific revenue guidance for 2024, it did suggest a range of three to four times the revenue levels of 2023, which implies approximately $22 million to $30 million. This forecast falls below the Street's expectation of $46 million.
Deutsche Bank has revised its own forecasts in light of the company's update, now projecting 2024 revenue to be $27 million, down 48% from previous estimates, and EBITDA to be a loss of $67 million, which is an improvement from the earlier forecast of a $101 million loss.
Revenue estimates for 2025 have also been decreased to $107 million, a 28% cut from previous figures, with an anticipated EBITDA loss of $51 million. The new stock price target is based on a blended approach of projected 2027 sales and EBITDA multiples.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.