Shares of FuelCell Energy (NASDAQ:FCEL) jumped as much as 20.8% in trading Thursday after getting a notable upgrade from an analyst. The stock held double-digit gains most of the day and was up 12.3% at 1 p.m. EDT.
J.P. Morgan analyst Paul Coster initiated coverage on FuelCell Energy stock with an overweight rating and a $3 price target. The price implies a nearly 40% upside from yesterday's closing price.
Coster thinks that improvements on the balance sheet and the business moving toward profitability will help the stock over the next year. It doesn't hurt that clean energy and hydrogen have been favorites among investors over the last few months. That's helping push shares higher, even if FuelCell Energy still hasn't reached profitability.
The upgrade in shares has caused a temporary bounce in FuelCell Energy's stock, but the long-term challenges haven't changed. As you can see below, the company is losing money and funding continuing operations by issuing more and more shares to investors.
This isn't currently a sustainable business model, and until we see FuelCell Energy turn around operations, I will focus my investing dollars on more sustainable renewable energy stocks.