Fluence Energy Inc. (NASDAQ: FLNC) saw its shares jump sharply on Friday after Roth/MKM upgraded the battery storage company to Buy from Neutral and more than doubled its price target to $26 from $13. The upgrade comes on the heels of a record order intake and fresh supply agreements with two hyperscale cloud computing firms, highlighting growing demand for energy storage solutions to power AI-driven data centers.
Record Backlog and Order Intake
The company reported that order intake through May 6 reached approximately $2 billion, pushing its total backlog to a new company record of $5.6 billion. This backlog represents remaining performance obligations under signed contracts, though Fluence cautions that not all may convert to revenue due to cancellation or delay provisions.
Mixed Quarterly Results
Fluence reported fiscal second-quarter revenue of $464.9 million, a 7.7% increase year-over-year but below Wall Street's consensus estimate of $628.46 million. The revenue shortfall was partly attributed to a customs delay in Vietnam and equipment loading issues in Spain, which pushed about $80 million in revenue into the third quarter. The company's GAAP gross margin improved to approximately 10.0%, while its net loss narrowed to $29.2 million from $41.9 million a year earlier. Adjusted EBITDA came in at negative $9.4 million, an improvement from negative $30.4 million in the prior-year period.
Hyperscaler Deals and AI Demand
During the quarter, Fluence secured master supply agreements with two major hyperscalers—large cloud and internet infrastructure providers—to provide battery energy storage systems that can help stabilize power supplies for AI and other compute-intensive workloads. The company expects the first orders under these agreements in the third fiscal quarter. CEO Julian Nebreda noted accelerating orders and pipeline growth, as well as the completion of the company's first Smartstack delivery.
Guidance and Liquidity
Fluence reaffirmed its fiscal 2026 guidance, targeting revenue between $3.2 billion and $3.6 billion and adjusted EBITDA of $40 million to $60 million. The company also maintained its annual recurring revenue target of approximately $180 million by year-end. As of March 31, Fluence reported total liquidity of nearly $900 million, including $412.9 million in cash. Of the $5.6 billion in performance obligations, management expects 50% to 55% to convert to revenue within the next twelve months.
Analyst Divergence
While Roth/MKM turned bullish, other analysts remain cautious. Susquehanna raised its price target to $25 from $23 on May 8, maintaining a Positive rating, but UBS downgraded Fluence to Sell on April 17 with a target of just $8. The divergence reflects the tension between rising demand and the stock's recent run-up—shares have surged about 40% and were trading near $18.97.
Competitive Landscape and Risks
Fluence faces competition from established battery manufacturers like CATL and BYD, which are expanding into storage systems. Management noted that recent pricing shifts have not materially changed the competitive environment. However, the company warns in its filings that customers may cancel contracts, delay services, or postpone payments, and there is no guarantee that backlog will convert to revenue as planned. Ongoing losses leave little buffer if shipments stall or margins contract.
