Why UBS Cut Stem’s Price Target Despite Improved Software Mix and EBITDA

Stem, Inc. (NYSE:STEM) is one of the best renewable energy penny stocks to buy.

On March 10, 2026, UBS lowered its price target on Stem to $12 from $18 but kept a Neutral rating, citing a slower software sales outlook. The firm also reduced its adjusted EBITDA estimates for 2026, 2027, and 2028 to $10 million, $22 million, and $41 million, respectively, from prior forecasts of $17 million, $29 million, and $50 million. The revised target followed Stem’s fourth-quarter 2025 results, which the company had released on March 4.

Stem reported fourth-quarter 2025 revenue of $47.2 million, down 15% year over year, which the company said was mainly due to sharply lower battery hardware sales as part of its software-focused strategy. At the same time, software, services, and edge hardware revenue rose 62% to $46.5 million. Fourth-quarter non-GAAP gross margin improved to 45% from 36%, adjusted EBITDA rose to $5.5 million from $4.2 million, and net loss narrowed to $16.0 million from $51.1 million.

Why UBS Cut Stem’s Price Target Despite Improved Software Mix and EBITDA

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For full-year 2025, revenue increased 8% to $156.3 million, while software, services, and edge hardware revenue climbed 25% to $141.4 million. Stem also posted full-year adjusted EBITDA of $6.7 million, compared with a loss of $22.8 million in 2024, and ended the fourth quarter with $48.9 million in cash and cash equivalents.

Stem, Inc. (NYSE:STEM) provides software, services, and energy management technology for clean energy assets, helping customers monitor, optimize, and operate storage, solar, and other distributed energy systems across global markets.

While we acknowledge the risk and potential of STEM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than STEM and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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