From mid-summer of last year until late January and early February of this year, alternative energy stocks were among investors’ and analysts’ hottest picks. Over the past 12 months, many of these stocks make Tesla’s stock price gain of more than 500% look slightly puny.
Alt energy stocks have soared so high so quickly that some analysts have either downgraded them or cut their price targets or both. Morgan Stanley, for example, reinstated coverage of hydrogen fuel cell producer Plug Power on Monday but lowered its previous rating from Overweight to Equal Weight and set a price target on the stock of $35. The analysts liked the company’s position, but, “Even after forecasting double-digit revenue growth and strong margin expansion, we see modest stock-price upside.”
When Morgan Stanley made that call, Plug Power’s share price was nearly six times higher than it was a year ago. On January 26, the fuel cell company’s shares had traded 16 times higher than they had a year ago.
On Friday morning, B. Riley analyst Christopher Souther initiated coverage on three alt energy stocks and Piper Sandler’s Kashy Harrison announced an upgrade on another.
Souther initiated coverage on hydrogen fuel cell maker FuelCell Energy Inc. (NASDAQ: FCEL) with a Neutral rating and a price target of $11. The company’s shares closed at $9.66 on Thursday, which signals upside potential of nearly 14% to B. Riley’s target. For the year to date, FuelCell’s shares have dropped about 13.5%, and the 52-week trading range is $1.51 to $29.44.
Souther added some color to his view on the stock:
While it is already a leader in the distributed power generation fuel cell market, we are more bullish on the alternative value streams that FuelCell’s technology can create. Most exciting, in our view, is the carbon capture opportunity, where FuelCell sees a $122B market opportunity. … At FuelCell’s current valuation, we initiate at Neutral but are likely to take a more positive stance on the stock as the company continues steps toward commercializing some of its newer technologies.
The median price target on the stock is $13.75 and the high target is $17.20, so B. Riley’s view is somewhat bearish. Analysts see per-share losses in each of the 2021, 2022 and 2023 fiscal years, even though sales estimates nearly double between 2021 and 2023 from around $80.5 million to $159.6 million. Shares traded up less than 1% Friday morning.