What happened

Shares of fuel-cell company Bloom Energy (BE -5.10%) popped nearly 13% in early trading Wednesday, and remained up a healthy 10.3% as of 12:05 p.m. EST today. You can thank the analysts at Raymond James for that.

This morning, Raymond James -- one of the investment bankers that brought Bloom Energy public at an IPO price of $15 a share last year -- announced it is upgrading the stock to outperform. Raymond James also assigned the shares a target price of (wait for it) $13 -- $2 below that $15 figure.

Man in suit holding up a rising arrow

Image source: Getty Images.

So what

Raymond James cited Bloom's plummeting stock price as a key reason for its recommendation. The stock is down 36% since its July IPO, the analysts noted, and down 24% since mid-January -- a fact Raymond James attributed largely to insiders selling the stock after their lockup periods expired.

Despite all the selling, the analysts argue that little has changed for the worse about Bloom's business over the last seven months, so the stock has been punished unfairly, and should be bought.

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Now what

In support of this position, Raymond James made the claim that Bloom reported its "first year of positive cash flow in 2018." Deeper within its note, the analyst clarified that it was referring only to "operating cash flow ... before working capital changes." Bloom's own earnings report showed that Bloom consumed $58.4 million in cash from operating activities in 2018.

Raymond James went on to predict that Bloom will achieve "breakeven EPS and a 6% FCF yield in 2019," (i.e., free cash flow equal to 6% of the company's market capitalization, or about $70 million at Bloom's current valuation), "followed by sustained profitability and a 12% FCF yield" in 2020.

These seem like bold claims, given that as of this writing, most analysts who follow Bloom Energy (as compiled by Capital IQ) forecast negative cash from operations for Bloom this year, less than $40 million in FCF in 2020 -- and no GAAP earnings whatsoever before 2022 at the earliest.

Editor's note: Corrections have been made to this article.