Valuation-Heavy Fuel Cell Names See Profit Taking (BLDP) (PLUG) (FCEL)

Plug Power (Nasdaq: PLUG), FuelCell Energy Inc. (Nasdaq: FCEL), and Ballard Power System (Nasdaq: BLDP) are less energized Friday following a few weeks of strong gains and analysts becoming cautious on the segment.

Plug Power is retracing after popping higher Thursday. The company posted Q4 loss of $.08 per share, which was narrower from the prior year and flat with consensus estimates. Orders for this year are being modeled at $150 million, which would amount to gains across the board progressing through Q2, Q3, and Q4.

Cowen and Roth downgraded Plug Power to the equivalent of Neutral today. More than just the singular stock, the analysts mentioned that the segment was getting a little rich. Cowen's Robert Stone said, Fuel cell and hydrogen-related companies (BLDP, FCEL, HYGS, and PLUG) are trading in a range of 2.9-8.2x EV/2015E sales, and CPST is 3.3x. PLUG is at the high end, consistent with 2015E sales growth of 100% (vs. 19-39% for peers).

Roth's Philip Chen said, Peers in the fuel cell industry trade at 4.4x 2015 revenues (EV/S method) while PLUG is trading at ~11.3x our 2015 revenue estimate. While we continue to forecast strong revenue growth for PLUG going forward, risk/reward appears less favorable at current levels.

Notably, Hydrogenics (Nasdaq: HYGS) is having a strong session, up around 12 percent midday.

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