Shares of Fluence Energy Inc. (NASDAQ:FLNC) dropped 9.7% on Friday after analysts at UBS issued a downgrade and sharply reduced their price target, citing rising concerns over battery oversupply.
Analyst Jon Windham lowered the stock rating from Neutral to Sell and cut the price target to $8.00 from $22.00, implying substantial downside from Thursday’s closing level of $15.
Windham said changes in U.S. tax policy are prompting automakers to pivot away from electric vehicle battery production toward utility-scale battery energy storage systems (BESS), a shift that could lead to a significant supply glut. He expects excess capacity from 2027 onward to weigh on BESS pricing and put pressure on Fluence’s margins.
UBS also revised down its adjusted EBITDA forecasts, now expecting $53 million in 2026, $83 million in 2027, and $103 million in 2028, compared with prior estimates of $74 million, $136 million, and $209 million.
The updated outlook implies a two-year EBITDA compound annual growth rate of 121% between 2025 and 2027, below the 208% growth rate currently reflected in market expectations based on an 18x target multiple.
“The market significantly underappreciates the potential scale of BESS manufacturing capacity additions, in our view, and we see structural risks to BESS pricing and integrator margins driven by excess production at-or-below cost,” Windham said.
The downgrade underscores mounting concerns about intensifying competition and pricing pressure in the battery energy storage sector as production capacity continues to expand.