Shares in FuelCell Energy (FCEL), the U.S.-based developer of stationary fuel cell systems, closed Friday’s trading roughly 9% lower. This came after JPMorgan (JPM) slapped a Hold rating on the stock, citing a lack of customer orders over the past 12 months compared to its peers.
Summer Sale - Claim 70% Off TipRanks
BE has a long & short ETF? Explore BEX & BEZNotably, the investment bank added FuelCell to a list of 25 “high conviction” stocks to short as the third quarter begins. In other words, JPMorgan expects FCEL stock to underperform in the weeks ahead.
The list spans companies across a wide range of industries, including financial services, healthcare, consumer goods, and technology.
Why JPMorgan Remains Bearish on FuelCell
JPMorgan’s five-star analyst Mark Strouse gave the Sell rating and made the short call. He also cited FuelCell’s “consistently negative earnings and cash flow” as the basis for the Sell rating. This comes as the fuel cell systems developer saw its revenue drop and gross loss widen during its fiscal second quarter.
Interestingly, the comment about the lack of order activity comes despite FuelCell recently pulling the curtain on two new deals. The first, with energy infrastructure developer FitEnergy, was announced late last month. FuelCell is to deliver up to 380 megawatts of clean, on-site baseload power for data centers using its technology.
The other one was revealed this week. FuelCell signed a memorandum of understanding with Siemens (SIEGY) to support the delivery of more than 100 megawatts of power for commercial projects.
Yet Strouse believes FuelCell lacks momentum in customer orders compared to its peers.
Who Is Mark Strouse?
As a five-star analyst, Strouse ranks in the top 7% of the more than 12,000 Wall Street analysts tracked on TipRanks. The JPMorgan analyst covers the tech sector, focusing on companies based in the U.S. and Canada.
While Strouse’s success rate is only 49%, he has generated an average return of about 13% for investors.
Is FCEL a Good Stock to Buy?
On Wall Street, analysts remain cautious about FuelCell Energy’s shares, flagging a Moderate Buy consensus rating. This is based on three Buys, three Holds, and one Sell assigned over the past three months.
Moreover, the average FCEL price target of $22 implies only about a 5% upside (see FCEL stock forecast here).
