Upgrading to Buy; Valuation reset improves risk/reward

Research evidence excerpt

Upgrading to Buy; Valuation reset improves risk/reward

Investment Summary

Upgrading on Valuation Upside

We are upgrading EROC to Buy from Neutral and maintain our $16 price objective. Our

view is not driven by a change in the fundamental story, but rather by a meaningful

change in upside opportunity driven by valuation. Since initiation, the shares have

declined from $15.47/share at initiation to $10.15/share (-34% vs. S&P 500 +1.9%),

reducing the valuation by roughly 20% while the core elements of our investment thesis

remain largely intact.

At initiation, we viewed ERock as a differentiated beneficiary of accelerating AI-driven

electricity demand, constrained grid infrastructure, and the growing need for rapidly

deployable generation capacity. We continue to hold that view today. What has changed

is that investors can now access that opportunity at a substantially lower valuation while

many of the same growth drivers remain visible.

Levered to the Speed to Market Theme

ERock remains one of the most direct publicly traded ways to participate in the

emerging speed-to-power theme. The company designs, assembles, deploys, operates,

and maintains modular natural-gas-powered generation systems that provide bridge

power, backup power, and dispatchable generation for customers unable to wait for

traditional utility infrastructure. Its RockBlock platform can be delivered in as little as six

months and commissioned within approximately 12-18 months, offering a meaningful

advantage relative to multi-year interconnection and transmission expansion timelines.

Exhibit 1: Production of a RockBlock

From Hyundai marine engine to bridge to grid generation

Source: ERock Company Filings

BofA GLOBAL RESEARCH

As AI adoption accelerates and large-load customers increasingly face delays in