FuelCell Energy Is The 'Clear Leader' In Stationary Fuel Cell Applications

FuelCell Energy Inc FCEL has won a new advocate.

Oppenheimer initiated coverage Wednesday with an Outperform rating and dubbed FuelCell “the clear leader” in its class.

“We believe the compact footprint and scalability of FCEL’s design offer a unique solution for providing clean power and grid management services in densely populated areas,” analysts Colin Rusch and Noah Kaye wrote in a Wednesday note.

The Catalysts

The firm is positioned to reach positive operational cash flow in the next 12 to 18 months through expected contract wins in the U.S. and equipment sales in Asia, according to Oppenheimer.

FuelCell recently shifted focus to the Korean market with a POSCO (ADR) PKX relationship and a 20-megawatt deal with the Korea Southern Power Company subsidiary of Korea Electric Power Corporation (ADR) KEP. By analyst assessments, the company is securely situated in the region.

“We believe FCEL controls its own destiny in a market that has embraced the technology,” Rusch and Kaye wrote.

Rising Korean and U.S. sales could compound the positive effects of continued asset base expansion and related income growth. FuelCell’s recent capital raise and resulting balance sheet are considered supportive of such development.

The Bottom Line

Oppenheimer issued a $4 price target on the stock, which traded at $2.25 Wednesday, up 20 percent.

“We believe FCEL’s technology position deserves a premium which is currently offset by its history of operating losses,” Rusch and Kaye wrote. “As such, we believe a multiple in line with peers is appropriate as those factors balance.”

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