Needham initiated coverage of Babcock & Wilcox Enterprises (NYSE: BW) on Monday with a Buy rating and a price target of $20.00, up from the current trading price of $7.16.
The brokerage highlighted the company’s $2.4 billion FastPower contract with Base Electron as a key catalyst, alongside a $2.6 billion order backlog. Needham also pointed to a pipeline exceeding $14 billion for 2027 and beyond, representing roughly 4 to 6 gigawatts of power generation opportunities. The valuation model assigns minimal value to the FastPower expansion pipeline and BrightLoop, suggesting the shares largely reflect the core business and the net present value of the Base Electron project at current levels.
Babcock & Wilcox’s shares have appreciated 221% over the past year, reflecting strong market interest in its operational turnaround. The company reported adjusted earnings per share of $0.07 in the second quarter, surpassing expectations of $0.03, while revenue reached $319.7 million, significantly above the estimated $196.97 million. Adjusted EBITDA for the quarter rose to $21.8 million from $13.9 million in the same period last year, and net income totaled $14.3 million, compared with a net loss of $58.5 million a year earlier.
For full-year 2026, Babcock & Wilcox guided adjusted EBITDA to a range of $80 million to $105 million. The company also noted that it has cleaned up its balance sheet, positioning it for further growth. Needham’s data center thesis centers on FastPower’s potential as a recurring generation platform, driven by lengthening gas turbine delivery times and rising combined-cycle costs, which could prompt a reassessment of the stock’s valuation.
A second project is expected to receive authorization to proceed before the end of 2026, while the FastPower pipeline is projected to extend into 2027 and beyond. BrightLoop’s expansion horizon is set for 2028 and beyond, according to the brokerage’s outlook.
Analysts forecast the company will return to profitability this year, marking a significant shift from recent losses.
