Favorable Settlement Sends FuelCell Stock Higher

The company is set to report earnings this Wednesday

Digital Content Manager
Dec 27, 2021 at 9:15 AM
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The shares of FuelCell Energy Inc (NASDAQ:FCEL) are up 5% at $6.78 this morning, following news that the company has reached a favorable settlement agreement with POSCO Energy, allowing FuelCell to sell its products in Asian markets. This will provide a firm order for at least 20 SureSource replacement modules to service existing operating projects in South Korean in 2022. 

The equity has been distancing itself even further from its three-year peak of $29.43, touched on Feb. 10, and is now down 42% for the year. However, FCEL looks to have found a floor at the $6.00 level, while today's pop could put it back above recent pressure at the 10-day moving average. 

Analysts have been hesitant, with five saying "hold" and three saying "strong sell." Meanwhile, the 12-month consensus price target of $7.38 is a 9.2% premium to current levels. 

The firm has a fiscal fourth-quarter earnings report due out before the open on Wednesday, Dec. 29, which could make or break FCEL's next move. The stock has a history of dramatic swings, including a 14.6% pop during its last report, but has only settled higher the day after three of its last eight reports. Regardless of direction, FuelCell stock has averaged an 8.4% post-earnings move, which is slightly smaller than the 12.4% swing the options pits are expecting this time around. 

Speaking of, these traders have been much more bearish than usual. While calls still outnumber puts at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FCEL's 10-day put/call volume ratio stands higher than 94% of readings from the past year, implying long puts have rarely been more popular. 

Despite an upcoming earnings report, options are still well-priced. This is per the equity's Schaeffer's Volatility Index (SVI) of 100%, which stands in the 18th percentile of its 12-month range. This means options traders have been pricing relatively low volatility expectations at the moment. What's more the stock sports a Schaeffer's Volatility Scorecard (SVS) of 92, indicating that the stock tends to perform said volatility estimates. 

 

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