Shares of FuelCell Energy (NASDAQ:FCEL) have skyrocketed 668% over the past year thanks to growing interest in the burgeoning hydrogen economy, and J.P. Morgan expects the stock to maintain its upward trajectory over the coming months. Initiating coverage on FuelCell Energy with an overweight rating, Paul Coster, an analyst at J.P. Morgan, today assigned a 2021 fair value estimate of $3 -- about 40% from the stock's closing price of $2.16 on Wednesday.
According to Thefly.com, Coster, writing to investors in a research note, based his bullish stance on FuelCell Energy's recently shored-up balance sheet as well as the belief that the company is on the verge of achieving profitability as it generates consistent revenue from the projects in its backlog.
One of the most popular stocks among Robinhood investors, FuelCell Energy is attracting the attention of some on Wall Street as well. It's worth noting, though, that not everyone on the Street is convinced of the stock's potential to bound higher. In June, for example, Eric Stine, an analyst at Craig-Hallum, downgraded the stock to sell from hold and assigned it a $1.50 price target.
While J.P. Morgan seems optimistic about the company's ability to generate recurring revenue from its backlog, investors should recognize that FuelCell Energy recently reported during its Q3 2020 earnings presentation it's failure to grow its backlog on a year-over-year basis. It had a backlog of $1.3 billion, 4% lower than where it was at the same time in 2019.
For investors who find J.P. Morgan's enthusiasm compelling, it seems that only those willing to tolerate a considerable amount of risk should consider a position in FuelCell Energy. More conservative-leaning investors should look for the company to report increases in its backlog and progress toward profitability before considering a position.