FuelCell Energy has soared more than 80% in this month's stock market as the hydrogen play is seeing an uptick in deals to power data centers. The stock received a price-target hike on Wednesday, but the analyst issued a warning when it comes to FuelCell.
FuelCell stock jumped more than 8% before Thursday's stock market open, putting it on track to trade around the highest level since February. The leading provider of site-based, hydrogen-fed electricity generation that help reduce corporate carbon footprints, reported worse-than-expected third-quarter results on Sept. 9.
However, the stock still leaped more than 20% in market trade directly following the report as FuelCell's Q3 results highlighted a 4% increase in backlog from Korean contracts. The report also highlighted the company's focus on leveraging large-scale deployments to engage prospective data center customers. These sorts of deals are expected to pick up in 2026 and beyond.
"We are in conversations with leading data center developers, hyperscalers and investors about how our platforms can meet their rising demand for reliable, clean baseload power," CEO Jason Few told analysts on the Sept. 9 earnings call.
FuelCell: Data Center Tailwind
Since the earnings release FCEL stock has soared more than 80% and is now poised to add to that run. However, even before Q3 earnings report, there were signs FuelCell Energy was busy inking deals.
On July 30, the company and CGN-Yulchon Generation Co., an independent power producer in South Korea, signed an agreement for the purchase of fuel cells and maintenance services. Meanwhile, on July 10, FuelCell and Inuverse, a developer of next-generation AI-specialized hyperscale data centers, announced a strategic memorandum of understanding to explore opportunities to deploy up to 100 megawatts of fuel cell-based power starting in 2027 at the AI Daegu Data Center in South Korea. Inuverse is in the process of developing the project and claims it wants to make it Korea's largest data center.
On Wednesday, UBS raised its price target on FuelCell to 7.25 from 4.50 and kept a neutral rating on the shares. The firm highlighted the company's strong backlog for projects in South Korea and the overall landscape for data centers. However, the analysts also warned that the macroeconomic conditions still have hydrogen projects in limbo across the U.S. and "have spread a negative sector outlook."
Investors can keep tabs on the IBD Leaderboard watchlist, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
FuelCell stock has a 51 Composite Rating out of a best-possible 99. The stock also has a 46 Relative Strength Rating and an 11 EPS Rating.
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