As with many progress sectors, the new power phase has taken a beating not too long ago. And whereas some would say the dip is a chance to load up on shares at discount costs, Wells Fargo Praneeth Satish recommends the reverse when contemplating FuelCell Energy’s (FCEL) prospects.
In truth, even after FCEL shares have retreated by 67% from the mid-Feb highs, Satish thinks it’s arduous for the firm to justify its present standing in the market.
To this finish, Satish initiated protection of FuelCell with an Underweight (i.e. Sell) ranking and a $9 value goal. (To watch Satish’s observe document, click here)
FuelCell is a part of the nascent hydrogen economic system, an business nonetheless in its early innings and anticipated to boast some critical progress over the subsequent few years. As such, Satish has laid out the most bullish and bearish eventualities for the firm.
Looking at the upside potential, if, post-commercialization, FCEL’s carbon-capture enterprise attains high-speed progress, and the stationary energy hydrogen market picks up steam quicker than anticipated, Satish thinks the inventory might be value $17 a share, with income rising at a CAGR (compound annual progress fee) of 42% throughout the subsequent 10 years.
At the different finish of the spectrum, if FCEL’s new merchandise resembling the stable oxide platform and carbon seize will fail commercially and the firm’s carbonate distributed technology enterprise continues to be its solely dependable income, Satish expects the shares to be value $three a chunk, with income rising at a 22% CAGR over the subsequent decade.
Ultimately, nevertheless, Satish’s base mannequin initiatives FCEL will develop over the similar interval at a 32% CAGR. And whereas this estimate requires “continued growth in FCEL’s established carbonate fuel cell business and commercial success in FCEL’s technologies under development,” this situation shouldn’t be sufficient to steer Satish that FCEL represents a sound funding.
“While the company should benfit in the coming years from the commercialization of a new solid oxide fuel cell product and carbon capture opportunities,” the analyst summed up, “We struggle to see a likely scenario in which FCEL can grow into its valuation.”
Overall, the Street’s present evaluation of FCEL presents an fascinating conundrum. While 4 Holds and a couple of Sells add as much as a Moderate Sell consensus ranking, the $10.63 common value goal implies ~14% upside from present ranges. (See FCEL stock analysis on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is essential to do your personal evaluation earlier than making any funding.
