Roth Capital affirms FuelCell Energy (Nasdaq: FCEL) at Neutral with a price target of $2 following restructuring news and preannounced results.

The firm noted today:

• FuelCell Energy preannounced F4Q16 (Oct.) results well below consensus. The company preannounced F4Q16 (Oct) revenue of $23.0-$25.0m vs. our forecast of $56.0m and the $52.3m consensus. We believe the delta came from a 5.6MW project with Pfizer, where FCE arranged a sale-leaseback with a financial institution that will be recognized over the 20 year PPA. We expect management to give further color on its year-end conference call, which will likely be held in early-January.
• Management is taking necessary actions to reduce FCE's operating costs. The company is reducing materials spend and it is lowering its global headcount by 96 positions, or approximately 17%. FCE is also taking actions to reduce annual operating costs by $6m, or ~15% of estimated FY16 operating expenses. Management indicated that FCE will move forward with a lower annual production rate of 25MW from the prior rate of 50MW.
• Management indicated that contracted backlog totaled over $400m as of October 31.

Estimate changes: FY16 revenue from $139.8 million down to $107.8 million and EPS from ($1.63) to ($1.74).

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