UBS has recently lowered its price objective for Stem Inc. (NYSE:STEM) to $12 from an earlier $18, while keeping a Neutral recommendation. This modification is primarily attributed to a more conservative projection for future software sales and a downward revision of estimated adjusted EBITDA for the years 2026, 2027, and 2028. The new forecasts are $10 million, $22 million, and $41 million, respectively, representing a reduction from previous figures of $17 million, $29 million, and $50 million. This decision by UBS came after Stem’s release of its fourth-quarter 2025 financial results on March 4th.
In the fourth quarter of 2025, Stem reported revenues of $47.2 million, marking a 15% decline compared to the previous year. This decrease was largely a strategic move, as the company intentionally scaled back its battery hardware sales to focus more intently on its software offerings. Concurrently, revenue generated from software, services, and edge hardware components surged by 62%, reaching $46.5 million. The company's non-GAAP gross margin also showed significant improvement, increasing to 45% from 36%. Furthermore, adjusted EBITDA saw an uptick to $5.5 million from $4.2 million, and the net loss significantly narrowed from $51.1 million to $16.0 million, indicating progress in operational efficiency.
For the entire fiscal year 2025, Stem’s total revenue grew by 8% to $156.3 million. Revenue from software, services, and edge hardware specifically climbed by 25% to $141.4 million. A notable achievement for the full year was the realization of a positive adjusted EBITDA of $6.7 million, a substantial turnaround from a loss of $22.8 million in 2024. The company concluded the fourth quarter with a robust cash and cash equivalents balance of $48.9 million, highlighting its financial stability amidst its strategic shift.
Stem Inc. plays a crucial role in the clean energy sector, offering specialized software, services, and energy management technologies. These solutions enable customers to effectively monitor, optimize, and manage various clean energy assets, including storage systems, solar installations, and other distributed energy resources across diverse global markets.
Despite the positive advancements in its software and service segments, UBS's revised outlook on Stem's price target reflects ongoing market dynamics and expectations for future growth in the clean energy technology space. The adjustments highlight a careful evaluation of the company’s revenue streams and profitability projections in a competitive and evolving industry landscape.
