Last Updated: 14 Sep 2024
## Executive Summary
ESS Tech Inc. (GWH) is a developer and marketer of iron flow batteries for utility and commercial energy storage needs. The company is facing challenges in the current market environment, with negative earnings and revenue growth. Despite this, analysts remain cautiously optimistic, with a consensus target price of $23, implying a potential upside of over 300%.
## Company Overview
ESS Tech Inc. is headquartered in Wilsonville, Oregon, and has a market capitalization of approximately $64.3 million. The company's iron flow batteries are designed for long-duration energy storage applications, with a focus on the utility and commercial markets.
## Fundamental Analysis
Financial Performance:
Revenue for the latest quarter (ending June 2024) was $7.4 million, a decrease of 0.87% year-over-year.
Gross profit was $0.89 million, resulting in a gross margin of 12%.
Net loss for the quarter was $72.9 million, resulting in a loss per share of $6.3.
The company has a negative EBITDA of $72.9 million.
Valuation:
The stock is currently trading at $5.42 per share, below its 52-week high of $31.65.
The price-to-sales ratio is 8.66, indicating that the stock is trading at a premium to its revenue.
The price-to-book ratio is 0.932, indicating that the stock is trading close to its book value.
## Technical Analysis
Trend:
The stock is currently in a downtrend, with the 50-day and 200-day moving averages both above the current price.
The relative strength index (RSI) is below 30, indicating that the stock is oversold.
Support and Resistance:
Immediate support is at $5.20, the 52-week low.
Resistance is at $9.56, the 50-day moving average.
## Short Term Outlook
In the short term, the stock is likely to remain volatile, with potential downside to the $5.20 support level. However, if the market sentiment improves and the company reports better-than-expected earnings, the stock could rally towards the $9.56 resistance level.
## Long Term Outlook
Analysts remain cautiously optimistic about the long-term prospects of ESS Tech Inc. The company's iron flow batteries have the potential to play a significant role in the transition to renewable energy. However, the company needs to improve its financial performance and demonstrate its ability to scale its operations.
## Analyst Recommendations
Of the analysts covering ESS Tech Inc., 2 have a "Strong Buy" rating, 2 have a "Buy" rating, and 3 have a "Hold" rating. The consensus target price is $23, implying a potential upside of over 300%.
