What Happened?
Shares of carbonate fuel cell technology developer FuelCell Energy (NASDAQ:FCEL) jumped 7.2% in the morning session after UBS adjusted its price target on the stock to $7.25 from $4.50, a significant jump.
While the bank maintained its Neutral rating on the shares, the substantial increase in the price target signaled a more optimistic valuation from the analyst. The move also arrived amidst a wave of positive sentiment across the renewable energy sector. For instance, shares of peer company Bloom Energy also experienced a strong rally, which helped lift investor confidence in the broader industry. This positive backdrop, combined with the upbeat price target revision from a major bank, gave investors a reason to bid up shares of FuelCell Energy.
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What Is The Market Telling Us
FuelCell Energy’s shares are extremely volatile and have had 85 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 14.5% after continued positive momentum as the company reported mixed but largely positive fiscal third-quarter results that featured a significant earnings beat.
Investors focused on the bottom line, where the company's adjusted loss of $0.95 per share was substantially better than the average analyst estimate of a $1.63 per share loss. The positive sentiment was further supported by a 97% year-over-year increase in revenue to $46.7 million. This surge was mainly driven by the Gyeonggi Green Energy (GGE) service contract in Korea, which contributed $24 million. The company also highlighted a 4% year-over-year increase in its backlog to $1.24 billion, signaling a solid pipeline of future business.
Overall, the much smaller-than-anticipated loss appeared to outweigh a slight revenue miss against some expectations, fueling strong investor optimism.
FuelCell Energy is down 27.6% since the beginning of the year, and at $7.51 per share, it is trading 52.4% below its 52-week high of $15.76 from September 2024. Investors who bought $1,000 worth of FuelCell Energy’s shares 5 years ago would now be looking at an investment worth $101.69.
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