Today, a host of hydrogen stocks are seeing impressive buying pressure materialize. Interestingly, the moves investors are seeing in FuelCell Energy (NASDAQ:FCEL), Bloom Energy (NYSE:BE) and Plug Power (NASDAQ:PLUG) come despite rather underwhelming earnings. At the time of writing, these stocks are all up more than 12%.
Bloom Energy missed on its top line while reporting another second-quarter loss of 20 cents per share. Despite being unable to top estimates for each of the past four quarters, Bloom is among the companies on investors’ radar today.
Similarly, Plug Power also reported an earnings miss, suggesting the company’s progress toward profitability is still uncertain. This electric vehicle (EV) charging company’s loss came in at 12 cents per share, which included a decline in revenue in Q2.
However, investors don’t seem to care about these earnings numbers at all today. After all, this is backward-looking data. And with the recent approval of President Joe Biden’s climate and tax bill this past week, there’s plenty to cheer.
Let’s dive into what investors are choosing to focus on with these hydrogen stocks today.
Why Are Hydrogen Stocks Surging Today?
The key driver of newly bullish investor sentiment for hydrogen stocks appears to be a couple analyst upgrades on hydrogen stocks. RBC Capital Markets’ Joseph Spak raised his price target on Plug Power more than 50%, to $29 from $18 per share. Spak has an outperform rating on PLUG stock.
Similarly, KeyBanc raised its target price by $2 per share to $32, citing an overweight rating as well.
The reasons for these upgrades are almost entirely tied to the recently-passed Inflation Reduction Act. Within this bill is approximately $370 billion of funding for renewable energy projects. Hydrogen-powered vehicles are among the focal points of this bill, though much of this spending will go to other green energy programs including EVs and charging stations as well as solar, wind and other forms of renewable energy.
The extent to which these renewable hydrogen companies will directly benefit from this bill is unclear. However, if the regulatory environment becomes much more accommodative, that’s bullish for these stocks in the long term. Accordingly, investors appear to be moving their expectations higher, in line with analysts.
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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.