FBR analyst Carter Driscoll weighed in today on renewable energy company Sunedison Inc (NYSE:SUNE) and fuel cell power plant company FuelCell Energy Inc (NASDAQ:FCEL), following the announcement of exchange transaction and approval of large fuel cell project, respectively.
Driscoll reiterated an Outperform rating on shares of SunEdison, with a price target of $10.50, after the company announced that it intends to raise money and restructure its debt in order to pay back $738 million.
Driscoll commented, “We view the transactions as costly from an equity dilution standpoint and cost of debt issued but argue that improving the near-term liquidity was more important than the longer-term dilution and higher interest expense.”
“SunEdison disclosed that it had $619 million in cash at year-end 2015, and that, after the dust clears, it expects to have $1.1 billion in cash, so the company added approximately $500 million in cash. The near-term liquidity crunch, we believe, is what most concerned investors,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Carter Driscoll has a yearly average return of -15.1% and a 29.4% success rate. Driscoll has a -15.3% average return when recommending SUNE, and is ranked #3469 out of 3630 analysts.
Out of the 14 analysts polled by TipRanks in the last 3 months, 10 rate SunEdison stock a Buy, 2 rate the stock a Hold and 2 recommend a Sell. With a return potential of 218.18%, the stock’s consensus target price stands at $10.85.
FuelCell Energy Inc
In addition, Driscoll reiterated an Outperform rating on shares of Fuelcell Energy, with an $8 price target, following the news that the Connecticut Siting Council approved a proposed 63.3 MW fuel cell energy park in Beacon Falls, Connecticut.
Driscoll noted, “While FuelCell and its partners must bid out the project into a multi-state RFP for renewable power and receive final project approval (slated for early March), we view this decision as a major milestone in the development of this project as the State of Connecticut has given approval to site the fuel cell park at the proposed location.”
“FuelCell typically earns $3,000/kW on its equipment, but a project of this size likely earns a discount. If we assume $2,000/kW this implies approximately $127 million in potential revenue for the equipment alone, which would be spread over multiple quarters as the project is built,” the analyst added.
As of this writing, all the 3 analysts polled by TipRanks rate FuelCell Energy stock a Buy. With a return potential of 197%, the stock’s consensus target price stands at $18.70.