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Shares plunged about 15% last week after the fuel-cell company said it offered $500 million of green convertible senior notes due 2028 in a private offering. Overall, shares are down by about 25% since the Q1 earnings report was released.
The company said plans to use a portion of the net proceeds to fund capped call transactions and to redeem all of the $57.6m outstanding principal amount of its 10.25% senior secured notes due 2027.
“While some were surprised to see the company come to market with a convertible debt issuance, we see this as an opportunistic (and low cost) issuance to fortify and simplify the balance sheet (potential PPA restructuring) and to ensure sustainable growth in light of an ever-changing financing environment,” the analysts said in a note.
Following the stock selloff, Morgan Stanley said it sees “an attractive entry point” in BE stock as it trades at a 50% discount to hydrogen peers and a 30% discount to the broker’s broader clean-tech universe.
“We believe the market reaction is overdone and is not representative of the true underlying fundamentals of the business and potential dilution from the issuance,” the analysts added.
Morgan Stanley sees the upcoming Analyst Day as a near-term catalyst for BE stock. The analysts also cut the price target on shares to $30 per share, representing an upside potential of nearly 130% through Monday’s close.
