Fuel Cell Stocks Up; US Dept Of Energy Researching Tech
Dow Jones Newswires
By Nick Baker
Of DOW JONES NEWSWIRES
NEW YORK -- Companies that make fuel-cell power generators rose for the second day Wednesday following word that the U.S. Department of Energy will research the use of hydrogen as an alternative fuel.
Energy Secretary Spencer Abraham made the research agreement with major automakers official Wednesday morning at a speech at the 2002 North American International Auto Show in Detroit.
"Under this new program ... the government and the private sector will fund research into advanced, efficient fuel cell technology which uses hydrogen to power automobiles without creating any pollution," Abraham said in a press release issued by the Energy Department Wednesday.
"This plan is rooted in President Bush's call ... to reduce American reliance on foreign oil through a balance of new domestic energy production and new technology to promote greater energy efficiency," Abraham added.
The release also notes that research on Freedom CAR, the government's moniker for the plan, will "involve a concerted long-term effort."
Formal terms of the partnership will be announced within the next few months, according to the release.
SatCon Technology Corp. (SATC) led the sector's charge, recently trading up 9.1% to $6.98; Ballard Power Systems Inc. (BLDP) shares were up 5.8% to $37.
FuelCell Energy Inc. (FCEL) erased earlier gains, recently trading down 5.3% to $20.69. The company's shares closed up 21.9% to $21.85 Tuesday.
Despite the news out of Detroit, fuel-cell makers probably shouldn't put their plans on cruise control.
Paul Fremont, an analyst with Jefferies & Co., said he doesn't think anything in Wednesday's announcement "will have any impact (on these companies) before 2010."
He said investors clamoring for fuel-cell stocks are "looking for the technology to take off beyond any normal investment timeframe."
Fremont has the stock of Plug Power Inc. (PLUG), Ballard Power and Intermagnetics General Corp. (IMGC) at hold ratings. However, he rates FuelCell Energy's stock at buy.
Fremont notes that FuelCell warrants a buy rating because it doesn't just target fuel cells for automobiles; the company also wants offices, hospitals and factories to use its products as primary, not just backup, power generators.
"It will take more than (government support) for this sector to succeed," Fremont said. "Government is clearly a factor, but the sector has to succeed with the consumer, and that's still an unknown."
Banc of America analyst Ali Agha agrees that fuel-cell producers won't see immediate gains from the Energy Department's research agreement.
In a research note Wednesday, Agha wrote: "We believe that a commercial fuel-cell vehicle targeting the mass market is a number of years away, and still faces significant cost challenges to match the internal combustion engine." |
