Wall Street analysts love this newly public energy storage company

Published Fri, Dec 10 20212:00 PM EST

Power storage buildout is key to a greener future since batteries will enable intermittent energy sources like wind and solar to fuel the grid continuously, and Wall Street analysts are bullish on storage play Fluence Energy . The company, which is a joint venture between AES and Siemens, went public on Oct. 28 via a traditional IPO that valued the company at roughly $4.7 billion . Shares are down about 10% since then, and while the company said supply chain headwinds will persist into 2022, Wall Street firms believe it will be a long-term win for investors. Goldman Sachs said the company is positioned to be one of the fastest-growing names across its coverage universe. Analysts led by Brian Lee see revenue growing from roughly $700 million this year, to around $2.5 billion by full-year 2024. The firm called Fluence a "unique pureplay model levered to the energy storage segment" when it initiated coverage on the stock with a buy rating on Nov. 29. Fluence doesn't manufacture the batteries themselves. Instead, the company provides the necessary infrastructure for battery buildout, including hardware as well as software to manage energy systems. The company is battery agnostic, meaning its products work across different battery manufacturers. The company focuses on energy storage for grid-scale projects, or large buildouts from utility companies. "We view FLNC as one of the 'must-owns' in the energy storage sector with market cap," Evercore ISI said on Nov. 22 when initiating coverage on the stock with an outperform rating. The firm pointed to headwinds including growing competition and supply chain risk, but said Fluence is a "premium growth company." The company was formally established as a joint venture in 2018, but it's been operating since 2007. Fluence previously tested the world's first lithium-ion energy storage system, according to the company. "This is not a fly-by-night upstart company," Evercore ISI added. The need to drastically cut emissions is getting a lot of attention in the U.S. under the Biden Administration and around the world, meaning Fluence operates in a market positioned for substantial growth. RBC estimates the grid-scale energy storage market will post a compound annual growth rate of 30% through 2030. The firm said Fluence stands out from competitors given its "technical know-how and global reach." RBC initiated coverage on the stock with an outperform rating on Nov. 22. Citi and Baird also have buy-equivalent ratings on the stock. Fluence posted its first quarterly update as a publicly traded company on Dec. 8. Revenue came in at $188.2 million, while analysts surveyed by FactSet were expecting $185.3 million. The company said it expects total revenue for fiscal 2022 to be between $1.1 billion and $1.3 billion. Evercore called this guidance "somewhat underwhelming," but said that investors should "look-through near-term supply chain headwinds and project delays as FLNC is experiencing broad-based global demand growth for its suite of energy storage product." However, not everyone is as optimistic. Raymond James has a market perform rating on the stock based on valuation concerns and fears of a "rather crowded trade." Bank of America also has a neutral rating on the stock, saying that macro tailwinds are already priced in. - CNBC's Michael Bloom contributed reporting.

The 20 MW Malita Energy Storage Facility in the province of Davao Occidental.

Courtesy: Fluence

The company, which is a joint venture between AES and Siemens, went public on Oct. 28 via a traditional IPO that valued the company at roughly $4.7 billion. Shares are down about 10% since then, and while the company said supply chain headwinds will persist into 2022, Wall Street firms believe it will be a long-term win for investors.