On Tuesday, B.Riley adjusted its outlook on FuelCell Energy (NASDAQ:FCEL), reducing the stock's price target to $1.50 from $2.00, while sustaining a Neutral stance on the company's shares. The firm's analyst cited a higher share count as the primary reason for the downward revision in the price target.
FuelCell Energy, a leader in the development of clean, innovative fuel cell solutions, reported second-quarter fiscal year 2024 revenue and EBITDA figures that aligned with analyst expectations. The company's revenue for the quarter was $22.4 million with an EBITDA loss of $26.5 million. These results were slightly better than B.Riley's projection of $20.9 million in revenue and a $24.3 million EBITDA loss, and also surpassed the general market consensus, which anticipated $21.3 million in revenue and a $20.1 million EBITDA loss.
The company has announced a reduction in its planned investments for fiscal year 2024 by up to $30 million, with the deferred expenses now expected to occur in fiscal year 2025. Despite this, FuelCell's year-over-year backlog showed growth, increasing from $1.02 billion to $1.06 billion at the end of the second quarter.
Additionally, FuelCell's technology will be featured in a biogeneration project by Ameresco (NYSE:AMRC), contributing $12 million to the company's product backlog. Moreover, a recent deal to provide 42 upgraded 1.4 megawatt carbonate fuel cell modules to GGE, along with a seven-year service agreement, is set to add approximately $160 million to the backlog, though this was not included in the end-of-quarter figures. Revenue recognition for the first six modules of this agreement is expected in the fourth quarter of fiscal year 2024.
In another significant development, FuelCell has extended its joint development agreement with ExxonMobil (NYSE:XOM) until December 31, 2026. Under this partnership, ExxonMobil affiliate Esso Nederland BV is constructing a pilot plant for direct flue gas carbon capture and storage (CCS) using FuelCell's technology at the Rotterdam Manufacturing Complex, with the project's commencement targeted for 2026.
In other recent news, FuelCell Energy has reported significant developments. TD (TSX:TD) Cowen reiterated a Hold rating on the company, maintaining a price target of $2.00. FuelCell Energy's financial results have been consistent with TD Cowen's and consensus estimates. The company has expanded its partnership with ExxonMobil and progressed projects with GGE and Ameresco.
FuelCell Energy has also adjusted its financial strategy for the fiscal year 2024, reducing planned expenditures by $30 million, a move that indicates a strategic approach to financial planning. The company has secured a substantial $160 million deal with Gyeonggi Green Energy Co., Ltd (GGE) in South Korea, involving the purchase of 42 upgraded 1.4-megawatt fuel cell modules, a development that is projected to generate significant revenue.
The company has welcomed industry veteran Tyrone Michael (TJ) Jordan to its board of directors, a strategic move expected to bring valuable insights. Lastly, FuelCell Energy has finalized a project financing agreement totaling $13 million with Liberty Bank and Connecticut Green Bank for two of its fuel cell projects.
InvestingPro Insights
As FuelCell Energy (NASDAQ:FCEL) navigates the complexities of the energy sector, recent data from InvestingPro provides a nuanced view of the company's financial health and market performance. With a market capitalization of $442.48 million, FuelCell Energy is a notable player in the clean energy space, and its financial metrics reflect both challenges and opportunities. The company's P/E ratio stands at -3.48, indicating that investors are willing to bet on its future growth despite current unprofitability. This sentiment is further reflected in the P/E ratio adjusted for the last twelve months as of Q1 2024, which is slightly lower at -3.72.
However, the revenue growth figures paint a more concerning picture, with a significant decline of -24.12% over the last twelve months as of Q1 2024, and an even steeper quarterly drop of -54.98% in Q1 2024. This suggests that while FuelCell Energy has strategic partnerships and backlog growth, it is facing substantial headwinds in generating consistent revenue. Additionally, the gross profit margin for the same period is negative at -24.39%, highlighting the cost challenges the company is currently facing.
Amid these financial metrics, two InvestingPro Tips offer further insight: FuelCell Energy holds more cash than debt on its balance sheet, which could provide some financial flexibility, and the company is quickly burning through cash, a situation that investors should monitor closely. For those interested in a deeper analysis, InvestingPro has 13 additional tips available, which could be accessed for an informed investment decision. Moreover, users can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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