When Wall Street analysts start covering your stock, the publicity is usually a good thing -- as long as they don't actually recommend selling the stock. Unfortunately, that's not how things worked out today for hydrogen fuel cell pioneer FuelCell Energy (FCEL -7.91%).
After analyst Canaccord Genuity started coverage on FuelCell, the stock tumbled, and eventually closed down 7.2%.
What Canaccord said today was nothing too harsh, and probably nothing investors didn't already know about FuelCell. In today's note, TheFly.com said, Canaccord argued that the business turnaround FuelCell initiated in 2019 is starting to work, and the stock is now "well positioned to exploit the heightened hydrogen global interest."
But the analyst also pointed out that FuelCell stock has roughly tripled over just the past month, suggesting that investors have gotten a bit carried away, bidding it up past what its fundamentals justify, at least in the near term.
Canaccord didn't advise selling the stock. Rather, the analyst's hold rating simply cautioned investors not to buy any more FuelCell shares at today's elevated prices, and wait for them to fall below the analyst's target price of $8.50 per share. At least part of that is good advice. In fact, until FuelCell proves itself capable of earning a profit, I don't think I'd be inclined to buy into it at all.
Still, after Canaccord's note today, FuelCell Energy shares have gotten cheaper, and now trade comfortably below that $8.50 target price.
Don't be surprised if tomorrow, traders take that as their cue to start buying FuelCell Energy again.