FLNC: Focus on the Datacenter Opportunity

Research evidence excerpt

FLNC: Focus on the Datacenter Opportunity

Fluence Energy, Inc.

Target/Upside/Downside Scenarios Investment summary

We believe shares of FLNC will perform in line with the peerFluence Energy, Inc.

group for the following reasons:

40 125 Weeks 18DEC23 - 08MAY26

35 • Elevated interest rate environment and project delays

30 impacting developers continue to be a headwind for the

25 CURRENTCURRENT 24.1624.16 industry and the company.

15 TARGETTARGET 16.0016.00 • Competition is growing in both international and domestic

10 markets which could result in pricing and margin pressure,

5 though we continue to believe the long-term market

0 opportunity and strong demand for FLNC's products are

150m attractive.

100m

50m • We believe FLNC will continue to innovate and improve

2024 2025 2026

D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M its product offerings as well as leverage its expansive

FLNC US Rel. S&P 500 COMPOSITE MA 40 weeks distribution channel and customer relationships, but

Source: Bloomberg and RBC Capital Markets estimates for Target growing competition poses a risk to the company's ability

Valuation to retain its industry-leading position, market share, and

Our price target of $16 is based on a 13.5x EV/EBITDA to our margin profile.

2028E EBITDA, a premium to the average of the historical • Domestic sourcing strategy positions the company to

range and captures the longer-term growth prospects for benefit from IRA credits, but in the near term, IRA

the company. Our price target supports our Sector Perform, uncertainty weighs on the clean energy industry as well as

Speculative Risk rating. We apply a Speculative Risk qualifier FLNC.

in light of the fast evolving and uncertain nature of the grid • We expect growth of the digital platform to gradually