FuelCell Energy (NASDAQ:FCEL) shares surged 10% on Tuesday after Canaccord analyst George Gianarikas upgraded the stock to Buy from Hold and lifted his price target to $30 from $12.
The rating change reflects increasing confidence that FuelCell Energy will announce a significant data center-related contract before the end of its current fiscal year. Gianarikas suggested the company could replicate, on a smaller scale, the success achieved by Bloom Energy in supplying power solutions to the rapidly expanding data center market.
“We have long felt that leveraging the company’s reliable clean power technology for data center customers would represent a meaningful strategic & financial inflection point for FuelCell, noting last quarter that we were tempted to upgrade the stock ahead of a potential announcement,” Gianarikas commented. “The exact timing of when this transformative data center deal is coming remains uncertain, with management only saying it expects something to materialize before the end of the fiscal year. However, we now feel there are enough data points to suggest that a landmark announcement is within reach, along with plenty more behind that.”
The analyst also increased his financial forecasts for FuelCell Energy, citing the scale of potential opportunities emerging from the data center sector over the coming years.
FuelCell Energy shares have risen more than 100% during the past two months, although trading has remained volatile as investors continue to assess both the timing and ultimate size of potential contracts linked to data center power demand.