Investing.com -- Mizuho initiated coverage of Bloom Energy Corp (NYSE:BE) with a “Neutral” rating and a price target of $28, saying that while the company benefits from increasing demand for power from data centers, limited visibility on converting safe-harbored orders into revenue keeps the brokerage cautious.

“We initiate at Neutral as the stock has run up on the AI theme, and owing to limited visibility on converting safe harbor orders into revenue,” Mizuho said.

Bloom Energy manufactures solid oxide fuel cells that use natural gas or hydrogen to generate electricity without combustion, resulting in minimal SOx/NOx emissions and lower CO2 emissions compared to traditional natural gas generators and turbines.

Mizuho highlighted Bloom’s potential to capitalize on the growing demand for reliable power, driven by AI, electrification, and the reshoring of U.S. manufacturing. Fuel cells offer a quicker and cost-effective alternative for data center customers and utilities compared to traditional grid electricity.

Fuel cells can be the quickest and cost-effective way for data center customers and utilities to add electric service as a reliable alternative to traditional grid electricity,” Mizuho said.

The firm estimates that Bloom’s delivered electricity cost is currently competitive in regions with high industrial electric rates, such as California, New York, and New England, and expects cost competitiveness to improve over time.

Mizuho pointed out that Bloom has the capacity to rapidly scale up production by adding one gigawatt of capacity every 6-9 months, with the ability to triple current production capacity to 3 GW at a relatively low capital expenditure of around $150 million.

But brokerage expressed concern about the company’s ability to convert its safe-harbored product orders, valued between $12-15 billion through 2028, into actual revenue.

Mizuho’s $28 price target is based on 21x its 2026 EBITDA estimate, excluding safe-harbored sales, which contributes $25 per share.

The target also includes a 50% probability of Bloom securing an additional $7 billion of safe-harbored product revenue through 2028, which could add $3 per share.

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