With the fall of oil prices and the rise of solar energy, analysts always have something to offer in the energy sector. Below, analysts weigh in on FuelCell Energy Inc (NASDAQ:FCEL) and PDC Energy Inc (NASDAQ:PDCE) as both companies shed light on their long-term plans.
FuelCell Energy Inc
In a very upbeat and promising report, analyst Craig Irwin of Roth Capital explains why he is initiating coverage on FuelCell Energy with a Buy rating and a $12 price target. The analyst believes the company is under appreciated, ahead of the competition, and has a strong pipeline in the works.
First, Irwin points to FuelCell being underappreciated in the current market. He notes that the company has been able to quickly lower product costs, “which has greatly exceeded DOE’s gap analysis,” and consequently “brings product costs closer to market-clearing prices.” Going forward, the analyst continues to expect progress from the company’s partnership with POSCO Energy, which will help FuelCell achieve market-clearing prices.
Irwin goes on to explain that FuelCell’s products have efficiencies between 47% and 60%, which supports “a favorable economic comparison versus certain competing distributed generation solutions.” The company also has a robust pipeline in the works, valued at $2 billion, as the company executes projects in Connecticut, Long Island, Beacon Falls, and California. Irwin believes that management is “well-positioned” to follow through on this valuable pipeline.
According to TipRanks, both analysts polled by TipRanks in the last 3 months are bullish on the stock with an average price target of $10.50, marking a 60% potential upside from current levels. Craig Irwin has a 30% success rate recommending stocks with an 11.8% average loss per rating.
PDC Energy Inc
After PDC’s analyst day, Credit Suisse analyst Mark Lear reiterated an Outperform rating on the company on April 8 and slightly increased his price target from $80 to $81.The analyst is bullish on the company’s long-term growth prospects and notes that the company’s projects continue to outperform.
Long term, the PDC Energy announced on its analyst day that it plans to deliver a 27% compound annual growth rate through 2018. Lear explains, “The midpoint of preliminary 2018 guidance of ~88 Mboe/d compares to our prior estimate of 78 Mboe/d. The company also updated its mix guidance, with expectations that crude will make up ~40% of production compared to our prior expectation of ~45%, and we would note guidance implies a 23% oil CAGR through 2018.”
The analyst goes on to explain that 29 of the company’s wells have continued to outperform by 10% to 20%. The company continues to test “spacing configurations,” according to Lear, “with current expectations to develop the field on 20-24 wells per section.” Lastly, Lear highlights that PDC has “one of the strongest leverage profiles in the space” and continues to enjoy strong metrics.
According to TipRanks, Mark Lear has a 52% success rate recommending the stock with a 28% average one-year return per rating. Out of the 13 analysts who have rated the stock in the last 3 months, 11 are bullish and 2 remain neutral. The average 12-month price target between these 13 analysts is $68.18, marking a 13% potential upside from current levels.