Fluence sees clearer US policy backdrop but investors unconvinced on demand

Investing.com -- Fluence Energy to enter fiscal 2026 on firmer policy footing, but investors are hesitating to call a demand recovery or a margin turnaround, Jefferies said which rated stock Hold.

Jefferies sees early signs that US demand is stabilizing as that uncertainty tied to tariffs and the Inflation Reduction Act has eased.

The analysts said the backdrop is “materially improved” versus early 2025, with key policy disputes resolved or nearing resolution.

Progress on AESC, settled IRA rules and a cooling in US China trade tensions is also helpful. New Treasury guidance on foreign entity rules could end up benefiting Fluence.

But there is hesitancy among investors as U.S. revenue fell 39% in fiscal 2025 and made up only about 30% of fourth quarter orders, giving an idea of the depth of slowdown.

Management must rebuild credibility, Jefferies said, and the buyside is not yet ready to assume a clear rebound in the core US market after a difficult year.

Margins remain a central concern. Jefferies said investors questioned whether Fluence can reach the high end of its margin targets and were skeptical of comparisons to Tesla’s storage margins.

The analysts expect some improvement after fiscal 2026 but do not model margins above 15%. They said potential cost efficiencies tied to AESC could help, but the scale of any boost is hard to quantify until the agreement is resolved.

Jefferies’ view that data centers could provide an upside lever has also not met with enthusiasm. Investors see that opportunity longer dated, and meaningful revenue tied to data center storage is likely a 2028 or later story rather than a driver in 2026 or 2027.

The stock has risen more than fourfold since its summer lows. Jefferies says improved policy clarity leaves Fluence in a better position entering fiscal 2026, even if doubts about growth and margins keep investors cautious.

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