From mid-summer of last year until late January and early February of this year, alternative energy stocks were among investors’ and analysts’ hottest picks. Over the past 12 months, many of these stocks make Tesla’s stock price gain of more than 500% look slightly puny.

Alt energy stocks have soared so high so quickly that some analysts have either downgraded them or cut their price targets or both. Morgan Stanley, for example, reinstated coverage of hydrogen fuel cell producer Plug Power on Monday but lowered its previous rating from Overweight to Equal Weight and set a price target on the stock of $35. The analysts liked the company’s position, but, “Even after forecasting double-digit revenue growth and strong margin expansion, we see modest stock-price upside.”

When Morgan Stanley made that call, Plug Power’s share price was nearly six times higher than it was a year ago. On January 26, the fuel cell company’s shares had traded 16 times higher than they had a year ago.

On Friday morning, B. Riley analyst Christopher Souther initiated coverage on three alt energy stocks and Piper Sandler’s Kashy Harrison announced an upgrade on another.

FuelCell Energy

Souther initiated coverage on hydrogen fuel cell maker FuelCell Energy Inc. (NASDAQ: FCEL) with a Neutral rating and a price target of $11. The company’s shares closed at $9.66 on Thursday, which signals upside potential of nearly 14% to B. Riley’s target. For the year to date, FuelCell’s shares have dropped about 13.5%, and the 52-week trading range is $1.51 to $29.44.

Souther added some color to his view on the stock:

While it is already a leader in the distributed power generation fuel cell market, we are more bullish on the alternative value streams that FuelCell’s technology can create. Most exciting, in our view, is the carbon capture opportunity, where FuelCell sees a $122B market opportunity. … At FuelCell’s current valuation, we initiate at Neutral but are likely to take a more positive stance on the stock as the company continues steps toward commercializing some of its newer technologies.

The median price target on the stock is $13.75 and the high target is $17.20, so B. Riley’s view is somewhat bearish. Analysts see per-share losses in each of the 2021, 2022 and 2023 fiscal years, even though sales estimates nearly double between 2021 and 2023 from around $80.5 million to $159.6 million. Shares traded up less than 1% Friday morning.

Canada-based Ballard Power Systems Inc. (NASDAQ: BLDP) makes, sells and services proton exchange membrane fuel cells for heavy-duty uses in marine systems, backup power systems and transportation. Souther initiated coverage on the stock with a Buy rating and a price target of $30. The stock closed Thursday at $20.63, in a 52-week range of $8.87 to $42.28. The stock was up more than 300% in early February but traded down nearly 12% for the year to date.

Souther had these comments on the company:

We see Ballard as best positioned in the fuel cell space for heavy-duty applications, where we are most bullish for the technology’s prospects, and believe the company has the partners, capital, and experience to establish and maintain its leading market position. … Our $30 PT [price target]  is based on a 15x EV [enterprise value]/sales multiple on our 2024E [estimate] for Ballard’s main business, as well as 7.5x EV/sales for our estimates of the company’s JV [joint venture] with Weichai in China.”

The median price target on the stock is $32.00 and the high target is $42.10, implying upside potential of around 50% to the median and 100% at the high target. At B. Riley’s target, the upside potential is about 45%. In early trading Friday morning, the stock added about 3.7%.

Workhorse

Electric truck maker Workhorse Group Inc. (NASDAQ: WKHS) had added more than 1,800% to its share price by early February. By late February, the shares had lost about two-thirds of that gain after the U.S. Postal Service awarded the contract for a new fleet of postal delivery vans to the defense subsidiary of Oshkosh. Souther initiated B. Riley’s coverage of the stock with a Buy rating and a price target of $20. The stock closed Thursday at $11.65, in a 52-week range of $2.08 to $42.96. The stock currently trades down for the year to date by around 37%.

In his comments on the company, Souther wrote:

Workhorse has the potential to gain early footing with key customers as it ramps up production and sales this year. The company will be beating to market most of the electric competition focused on the delivery space by quarters or years with its C-Series ramp expected this year, and we believe the larger size cargo offers differentiation in the space relative to the smaller-volume vans coming from the large auto OEMs and upstarts. We base our $20 price target on an ~4x EV/sales multiple on our 2023 revenue estimate of $538M, with net cash of ~$42M and ~$199M attributable to the company’s ~10% stake in Lordstown Motor Company.

The median price target on the stock is $18.00 and the high target is $29.00, implying upside potential of around 55% to the median and 150% at the high target. At B. Riley’s target, the upside potential is nearly 72%. The stock gained around 6.5% in Friday morning trading.

Rooftop solar panel installer Sunrun Inc. (NASDAQ: RUN) got a boost Friday morning when Piper Sandler’s Harrison upgraded the stock from Neutral to Overweight with a price target of $77 per share. At that price, upside potential to Thursday’s closing price of $47.20 is around 63%. Harrison’s upgrade is one of many over the past few weeks for the company that is widely viewed as the most likely to capitalize on growth in residential solar installation.

In his comments, Harrison noted:

Since the middle of February, solar stocks have come under significant duress due to a combination of rising interest rates, regulatory uncertainty associated with net energy metering [NEM] in CA [California], a lack of imminent catalysts, and a remarkable 2020 run. … [T]he market has line of sight toward longterm federal policy support via the “America Jobs Plan,” recent transactions highlight the group’s advantaged cost of capital even within a rising interest rate environment, and CA utilities are unlikely to win the NEM battle. Given recent share price weakness (down 51% vs. the recent peak) coupled with a strong growth story associated with residential solar (20-25% MW in ’21; 15% MW medium-term) and a management team with a history of value creation, we upgrade RUN to Overweight from Neutral.

The median price target on the stock is $81.00 and the high target is $108.00, implying upside potential of around 72% to the median and nearly 130% at the high target. The stock has gained around 6.3% in Friday morning trading.

Since March 1, Sunrun stock has been upgraded or initiated by nine of 11 analysts. The other two changed their price targets but not their ratings. One note of caution though could be the 18% increase in Tesla’s solar installation business in 2020. Analysts at Canaccord Genuity noted earlier this week that Tesla is beefing up its installation business this year.

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