FuelCell Energy Reports Yet Another Loss in Fiscal 4Q15
(Continued from Prior Part)
Revenue guidance
For fiscal 2016, FuelCell Energy (FCEL) is expecting revenues in the range $170 million–$210 million. Its revenues in the first half of 2016 should be in the range of $30–$40 million and are expected to come from Asia and power-purchase agreements.
FCEL’s revenues in the second half of fiscal 2016 are expected to be higher due to more complete power plant sales. However, this is dependent upon the timing of the company’s conversion of new contracts from its pipeline.
Once the company’s annual production capacity exceeds 100 megawatts, it’s expected to clock revenues in the range of $350–$450 million. Margins are expected to expand in 2016 due to a favorable sales mix.
Operating expenses are forecast to rise marginally to $16–$18 million in 2016. On the gross profit margin front, management expects electricity sales margins to improve to ~20% from their current level of ~16%.
Wall Street analysts’ recommendations
According to Wall Street analysts’ consensus estimate, the target price for FuelCell Energy is $21 for the coming one-year period. This amounts to an upside of ~28%. Among the analysts tracking FuelCell Energy, 67% are in favor of a “buy,” while 33% recommend a “hold” on the stock.
FuelCell Energy is a small part of the iShares Micro-Cap ETF (IWC). Leading biopharmaceutical company Intra-Cellular Therapies (ITCI), Exelixis (EXEL), and financial company Renasant (RNST) are the top holdings of IWC.
Outlook
Though FuelCell Energy is a loss-making company right now, it has a product portfolio with tremendous potential in the current power industry. The pace of its fall in revenues is slowing, which is a possible indication of a turnaround.
Additionally, according to research company Markets and Markets, the global fuel cell industry is expected to be worth $5.2 billion in 2019. It was worth $2.6 billion in 2014. That is an annualized growth of 14.7% in the next five years. Therefore, optimum capital spending, research and development, and improved sales volume may help FCEL’s operating performance in the long term.
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