FuelCell Energy Reports Disappointing Q2 Results; Shares Plunge 10.7%

FuelCell Energy, Inc. (FCEL) reported disappointing quarterly results mainly due to a decline in fuel prices and service agreements. Shares plunged 10.7% to close at $10.06 on June 10.

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FuelCell Energy designs, manufactures, operates, and services Direct Fuel Cell power plants that run on natural gas and biogas.

The company reported a loss of $0.06 per share, worse than the Street’s estimated loss of $0.05 per share, but better than the loss reported in prior-year quarter of $0.07 per share.

Revenue came in at $13.95 million, down 26% from the prior-year quarter due to a decline of $6.3 million worth of service agreements and license revenues. The company also missed the Street’s estimate of $18.86 million.

At quarter-end, the company reported a backlog of $1.32 billion, down 1.5% compared to the year-ago period, mainly due to a fall in fuel prices which has resulted in a decrease in forecast future revenue. (See FuelCell Energy stock analysis on TipRanks)

Mr. Jason Few, President and CEO of the company said, “We continue to increase our investment in research and development towards the commercialization of our solid oxide power generation, storage and hydrogen electrolysis platforms… We have increased our annualized production rate from 17 MWs at the end of fiscal 2020 to 32 MWs as of April 30, 2021.”

Following the results, Oppenheimer analyst Colin Rusch maintained a Hold rating on the stock and said, “With more limited operational and manufacturing staff, the company’s ability to serve faster turns in its product business is challenged. We believe FCEL has a chance to reach break-even through its own-and-operate model, but it will take longer than a ramp-up in equipment sales.”

The stock has a Moderate Sell consensus rating based on 5 Holds and 2 Sells. The FCEL average analyst price target of $10.30 implies 2.4% upside potential to current levels. Shares have gained 27.7% over the past six months.

According to TipRanks’ Smart Score system, FuelCell gets a 3 out of 10, suggesting that the stock is likely to underperform market expectations.