Cowen’s Jeffrey Osborne and Thomas Boyes explain why they upgarded FuelCell Energy to Outperform from Market Perform after today’s close:
We believe that, following several years of investment and effort, FuelCell Energy has made strong progress in reducing its fuel cell technology and manufacturing costs, and is successfully transitioning its stationary fuel cell power plant solution from the realm of R&D to an economically deployable renewable energy technology with a potential to become a part of the baseload generation mix. The unsubsidized cost of energy from FuelCell Energy's typical 2.8MW plant is now down in the $0.13/kWh range, and manufacturing costs have dropped roughly 70% over the past decade. Including benefits from Investment Tax Credit (ITC) and state-level incentives, the levelized cost of energy drops to $0.09-$0.11/kWh, which we believe is increasingly attractive relative to several states' baseload pricing, and able to compete with intermittent renewable sources…
While in several markets, including the U.S., fuel cell power plants are still a relatively novel technology for regulatory, government, and financing circles, and these stakeholders have a learning curve to climb, making for lengthy approval processes, we would expect the stationary fuel cell power plant technology penetration to increase. With continued cost improvements and ramping production levels, we believe the company is well on its way to becoming EBITDA positive by mid-FY2015 at the latest. We believe upcoming orders with NRG Energy (NRG) and Long Island Power Authority will give investors a clear path to this level of profitability next year
Shares of FuelCell Energy have gained 3.5% to $2.35 in after-hours trading after dropped 2.2% during normal hours today.
No comments:
Post a Comment