What happened

Shares of fuel cell maker Plug Power (NASDAQ:PLUG) rose 31% in February, according to data from S&P Global Market Intelligence. Paired with their climb in January, shares ended last month more than 44% higher than when the new year began -- a significant turnaround from the 48% drop they suffered in 2018.

Unlike its movement in January, the stock's rise last month isn't directly related to a company announcement, and it can't be attributed, as in other months, to an analyst's upgrade. Instead, the climb reflects news related to Bloom Energy (NYSE:BE).

With an ascending arrow behind him, a businessman excitedly points upward.

Image source: Getty Images.

So what

While the company's fourth-quarter earnings release early in the month did little to excite investors, an analyst's upgrade of Bloom Energy's stock in the middle of the month had the opposite effect and drove investors to pick up shares. Upgrading the stock from market perform to outperform and assigning a price target of $13, Pavel Molchanov, an analyst at Raymond James, based his decision, according to StreetInsider.com (subscription required), on the belief that the company will reach breakeven on an earnings-per-share basis and achieve a 6% free cash flow yield in 2019. And he expects the company to reach sustained profitability and a 12% free cash flow yield in 2020.

The connection between the two events may seem tenuous, but it's undeniable. Plug Power's stock, absent any company news, closed 19% higher on the day after the upgrade on Bloom Energy's stock. Why? The analyst's opinion suggested to Plug Power's investors that profitability for a fuel-cell company -- nonexistent up until now -- isn't an impossibility. In addition, it provided investors with some reassurance regarding Plug Power's recent outlook on its own profitability. In early January, management provided a business update in which it forecast achieving positive adjusted earnings before interest, taxes, depreciation, amortization, and stock-based compensation (EBITDAS) in 2019; moreover, Andy Marsh, Plug Power's president and CEO, said, "By the third quarter, the company is projecting continuous EBITDAS positive performance for our business."

Check out the latest earnings call transcript for Plug Power.

Now what

The business update from early January was hardly the first time that Plug Power's management has issued such an auspicious outlook. In 2013, Andy Marsh suggested the company would break even on an EBITDA basis in Q2 or Q3 2014. Instead, the company reported an EBITDA loss of $84 million in 2014; the company, subsequently, reported an EBITDA loss of $52 million in 2015. With such a checkered history regarding its projected profitability, investors would be well served to be extremely circumspect about embracing management's outlook -- whether at face value or paired with an optimistic outlook from a peer.