Project Approval 'Imminent' For FuelCell, Analyst Values Stock At $8

FBR's Carter Driscoll maintained an Outperform rating on FuelCell Energy Inc FCEL, with a price target of $8.

According to the FBR report, "FuelCell shares have rallied sharply over the past week, partly, we believe, on the expectation that the company will receive final approval for its proposed 63.3 MW fuel cell park located at Beacon Falls, Connecticut."

Approval for Beacon Falls, expected as early as March 11, would make this the largest fuel cell facility in the world. With the final approval, equipment sales are expected to transition into backlog, from pipeline.

"We believe this would be a clear positive for the shares, as we estimate the equipment sales alone could be worth $140 million to $190 million over multiple quarters," Driscoll said.

In addition, service revenue is likely to add another $130-$285 million to the company's revenue through the life of the contract, taking the total value to $270-$485 million. FuelCell Energy would maintain the Beacon Falls project, not own it.

"The entire project is expected to be operational by YE18, although power could be generated in stages. If approved, the next step would be to bid the projected power into the ISO-NE renewable auction," Driscoll explained.

Another emerging opportunity for the company is the elimination of carbon emission from existing gas and coal based power plants, while increasing energy output.

Driscoll cautioned, however, that "FuelCell reports F1Q16 results on March 10, and we believe the expected muted results could create some near-term pressure on the stock."