FuelCell Energy drops 7% on disappointing 4th quarter earnings

FuelCell Energy.
FuelCell Energy.

  • FuelCell Energy stock dropped over 7% Thursday after a lackluster fourth quarter earnings report.
  • The company posted a 17% revenue increase on a full-year basis, but it still trades at 34x sales.
  • JPMorgan warned the valuation of FuelCell may be overheated in a note earlier this month.
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FuelCell Energy stock dropped over 7% on Thursday after delivering a lackluster performance in the fourth quarter.

Analyst forecasts had predicted a $0.04 loss per share on revenue of $17.05 million for FuelCell. The company missed those estimates, notching an $0.08 loss per share on revenues of $17 million.

FuelCell also posted a net loss of $18.9 million in the quarter, although that is an improvement from the company’s $35.2 million net loss from the year-ago quarter.

On a full-year basis, FuelCell Energy’s revenue did rise some 17%, but many investors will be looking for more as the company is currently priced at around 34x sales.

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FuelCell stock surged at the start of 2021, jumping by about 96% until its January 13 intraday highs of almost $21 per share.

Since then, however, the stock has fallen back down to around $16 per share after a report from JPMorgan questioned the current valuation and assigned a $10 price target for the shares.

The disappointing showing from FuelCell is another bump in the road for hydrogen fuel cell makers of late. Rival fuel cell maker Plug Power saw its shares plunge 7% on Wednesday after Kerrisdale Capital announced a short position and called the hydrogen economy a “fool cell” future.

And on Wednesday, Credit Suisse downgraded another hydrogen rival ,Bloom Energy, to neutral from outperform, sending the stock down over 3%.

Still, FuelCell remained upbeat in their most recent earnings report, noting the benefits of a new, more green-focused, presidential administration.

“Based on the initial policy objectives outlined by the incoming White House administration, we expect clean energy and climate policies in the U.S. to begin to match the pace of advancement seen in other markets such as Europe and Asia, and to be favorable toward the development of the growing hydrogen economy,” said Jason Few President and CEO of FuelCell Energy.

Few also noted FuelCell is in a better position financially after recent capital raises allowed the company to “retire high-cost debt.”

Shares of FuelCell traded at $15.88 on Thursday morning putting the company’s market cap at around $5 billion.

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Plug Power falls 7% after JPMorgan calls the company ‘fully-valued,’ issues price target below current level

Shell Hydrogen charging point 2019
  • Plug Power fell 7% on Thursday after JPMorgan initiated the hydrogen fuel-cell manufacturer at “neutral” with a $60 price target, representing potential downside of 14% from Wednesdays close.
  • Despite the downside price target, JPMorgan believes Plug Power is a first-mover in what represents a “massive market opportunity” that could be worth $200 billion.
  • Plug Power is “fully-valued but a must own in the hydrogen space,” JPMorgan said.
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Plug Power fell as much as 7% on Thursday after JPMorgan said the hydrogen fuel-cell leader is “fully-valued but a must own in the hydrogen space.”

JPMorgan initiated Plug Power at a “neutral” rating with a $60 price target, representing downside potential of 14% from Wednesday’s close. The price target is based on a discounted 2024 market cap derived from a 60-times enterprise value-to-2025 EBITDA forecast of $534 million. 

Shares of Plug Power have been on a tear in recent months, and year-to-date Plug Power is up 105% as of Wednesday’s close.

Plug Power is a first-mover in the hydrogen space, having developed proven proton exchange membrane technology that powers logistic vehicles for first-rate customers like Walmart and Amazon. The company is capitalizing on what could be a $200 billion total addressable market, JPMorgan said.

Plug Power has a strong balance sheet and planned production scale to capitalize on that opportunity, the note said.

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JPMorgan expects the New York-based company to see a 40% compounded annual growth rate that generates $1.2 billion of gross billings by 2024.

The three big growth opportunities for Plug Power are: 1) expansion of the existing materials-handling franchise, 2) expansion into new markets and verticals including Europe, electric vehicles, and data-center backup power, and 3) green hydrogen, JPMorgan explained.

And a recent partnership between Plug Power and Renault to jointly develop hydrogen-powered electric vehicles could “produce 40% upside to the 2024 revenue target, pushing revenues to $1.7 billion, and cause growth to accelerate in 2025,” JPMorgan said. 

Revenue in 2025 could exceed $2 billion if Plug Power manages to successfully execute on its growth strategy, JPMorgan said, adding that it thinks this “justifies the very high multiples at which the stock trades.”

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