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NEW YORK (AP) -- Investors are poised to take a second look at FuelCell Energy Inc. on Wednesday after its stock faced a major sell-off in the previous trading session on disappointing news about a state contract. The Danbury, Conn.-based company's shares fell $2.82, or 21.9 percent, to close Monday's abbreviated Christmas Eve sesssion at $10.06, just a few cents above its 52-week low of $10.03. Though Connecticut's public utility gave a preliminary approval on an order for six of the company's DFC3000 fuel cells, the clearance fell short of some investors' hopes. Connecticut's Department of Utility Control (DPUC) ordered products with 16.2 megawatts worth of annual generating capacity, but some expected more than twice as much, according to JPMorgan analyst Brannon Cook. A one-megawatt plant running continuously at full capacity can power 778 households each year, according to the U.S. Department of Energy. While Cook and several other analysts said the news was somewhat discouraging, they issued a bright outlook for FuelCell's potential in other areas, and for further contracts from DPUC down the line. Cook cited the fuel-cell maker's "momentum" in California and South Korea. In addition, it was noted that Connecticut still requires 26 megawatts of annual generating capacity to meet its mandate. "We expect FuelCell will have meaningful potential for additional wins in future rounds," Cook said in a note to clients Monday. Connecticut rejected some of the proposed projects because of cost concerns. Lazard Capital Markets' Sanjay Shrestha called this "surprising" since the costs had been well known and the state seemed more concerned with meeting its mandate than trimming expenditures. Canaccord Adams analyst John Quealy maintained a "Buy" rating on FuelCell in a note Monday, pending a final decision in Connecticut coming on Jan. 9. He noted that shares may be weak over the short-term due to overly aggressive expectations. "Given the 52-week high on Friday," Quealy wrote, "it appears that shares may have been set up for 'buy the rumor, sell the news' regardless." Cook reinforced the view that FuelCell shares may experience short-term pressure, but said its long-term view provides several stock catalysts from contracts in California, South Korea and elsewhere. "Over the longer term we believe the stock should trade at a premium to its fuel cell peers based on a better path to profitability," he wrote.
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