What happened

Friday is turning out to be another good day to own shares of FuelCell Energy (NASDAQ:FCEL).

Yesterday, FuelCell joined a broad-based rally that swept all the major fuel cell names, which charged higher on news that category leader Plug Power (NASDAQ:PLUG) was receiving a $1.5 billion investment from a large South Korean industrial conglomerate. Today, FuelCell stock is up another 3% as of 1:15 p.m. EST, but today's news isn't half as good.

Arrow angles up on a green stock chart

Image source: Getty Images.

So what

Adding detail to previous reports on Jefferies' initiation of coverage of FuelCell stock yesterday, this morning TheFly.com noted, again, that the investment banker assigned FuelCell only a hold rating -- and an $11 price target, implying there's about 29% downside risk in the stock.

Policy changes that would benefit renewable energy, including hydrogen, helped send FuelCell's stock flying in 2020, according to Jefferies as reported by TheFly. But despite these tailwinds, and despite a bigger "war chest" of cash collected from recent stock issuances, Jefferies was led to conclude that all of the pluses accruing to FuelCell stock in the past year are now baked into the stock's price.

Now what

Translation: Even if you believe the mammoth 575% gain in share price FuelCell has seen over the past 12 months is justified, there's really no more room for this stock to run higher at this point -- and that implies that the only direction FuelCell shares can go from here is down.

Investors today seem not to agree with that assessment, but after reviewing the company's 20-year-plus history of doing nothing but lose money, I'm afraid I'm going to have to side with Jefferies on this one.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.