Plug Power (PLUG), Ballard Power (BLDP), FuelCell (FCEL) Pull Away From Sector Rally

Updated from 12 p.m. on share reversal.

NEW YORK (TheStreet) -- The alternative fuel sector was setting up for another day of robust gains on Tuesday, but the tides turned for three of the heavy-volume stock plays around mid-session. 

Fuel-cell maker Plug Power (PLUG) began to dive just after midday, after following Ballard Power Systems (BLDP), ZBB Energy (ZBB) and FuelCell Energy (FCEL) higher for much of the session. Shortly after, FuelCell and Ballard Power Systems tumbled.

The industry was celebrating a days-long rally in the sector, extended by an above-consensus first-quarter report from FuelCell after the bell Monday. 

Danbury, Conn.-based FuelCell posted first-quarter revenue 22% higher to $44.4 million. The company reported an adjusted loss of $9 million, or 4 cents a share, compared with a loss of $12.5 million, or 7 cents a share, in the year-ago period.

Product sales grew nearly 19% to $34.5 million and advanced technologies contracts more than doubled to $5 million on higher engagement with the U.S. Department of Energy Solid State Energy Conversion Alliance (SECA).

Analysts surveyed by Thomson Reuters had anticipated a net loss of 4 cents a share and revenue of $43.4 million. 

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The sector's rally can be traced back to February when Plug Power announced Wal-Mart  (WMT) had expanded its contract with the alternative fuel developer.  

The Latham, NY-based business said the multi-site GenKey purchase order from Wal-Mart would see a roll out of hydrogen fuel cell solutions to power electric lift truck fleets at six of Wal-Mart's North American distribution centers.

A total 1,738 GenDrive fuel cell units will be deployed over two years with a six-year GenCare service contract for each site. The first site will be deployed by the second quarter ending June of 2014.

Shares climbed even higher when Cowen & Co. analyst Rob Stone wrote in a research note that the deal with Wal-Mart was likely only the first of big-name contracts. 

On Monday, shares exploded 24.6% after Cowen & Co. analyst Rob Stone said its recent deal with Wal-Mart (WMT_) was only the first of big-name contracts.

"The six-site Wal-Mart order is also a framework contract for future sites," said Stone in a note. "We expect more deals with customers."

The firm raised its 12-month price target to $5.50 from $5.

By 1 p.m. EST, Plug Power had taken off 17.4% to $8.49, while Ballard Power Systems was 11.8% lower to $6.07. FuelCell dropped 2.3% to $3.84. Nano-cap ZBB Energy remained on high, adding 38.9% to $3.68. 

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Plug Power is due to report before the bell Thursday, March 13. 

Analysts surveyed by Thomson Reuters forecast a net loss of 8 cents a share in the three months to December. Revenue is expected to jump 26% to $7.45 million. 

For fiscal 2013, analysts anticipate a net loss of 48 cents a share, narrower than 2012's loss of 93 cents a share. Revenue is expected to fall to $26.05 million from $26.11 million in fiscal 2012.

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