By any objective standard, Plug Power’s (PLUG) Q4 “earnings” report was a disaster.
Relative to analyst expectations of a $0.10 per share loss for the quarter, Plug’s reported loss of $1.12 per share was 11x worse.
Want to talk revenue? Plug had negative revenue for the quarter, a consequence of the company having to subtract from money coming in the door, “certain costs of $456 million” — the “non-cash charges” of Plug issuing truckloads of stock purchase warrants to Walmart and Amazon.com to encourage them to buy its fuel cells. So while Plug headlined its earnings announcement with a report of $96.3 million in “gross billings” for the quarter, and $337 million in “gross billings” for the year, on the top line, the company’s actual revenue was negative $316 million for the quarter and negative $100 million for the year.
The company’s revenues literally rolled in reverse.
Naturally, this made earning any kind of a profit out of the question. Gross losses at the company tumbled to $422.6 million for the quarter and $423.3 million for the year. Operating losses were $470.5 million, and $550.3 million, respectively. Net losses — $476.2 million, and $561.7 million, respectively.
So it was miserable news all around. However, Oppenheimer analyst Colin Rusch did a strange thing: He boosted the price target on PLUG from $23 to $62, while reiterating an Outperform (i.e. Buy) rating. (To watch Rusch’s track record, click here)
And how do you explain that?
Despite the splotches of bright red ink spilled all over Plug’s earnings report, the 5-star analyst declared the company’s results “solid.” Ignoring the negative revenue, he emphasized the fact that management reiterated its guidance for future “gross billings” of $475 million in 2021, adding that Plug plans to grow this number to $750 million in 2023. And he applauded the fact that Plug reiterated its plans to drive forward in an attempt to dominate what it calls “the $10T hydrogen economy,” accelerating its green hydrogen generation business, continuing to sign “partnerships, joint ventures and acquisitions” with foreign partners, and expanding “customer relationships across all businesses” in an effort to reach its goals.
Peering far into the future, Rusch posited that if Plug’s plans succeed, then by 2026 the company could do as much as $2.6 billion in “gross billings,” and earn a percentage internal rate of return on its investments “at least [in the] mid-teens.”
For every kilogram of green hydrogen (that’s hydrogen gas produced from splitting off hydrogen atoms from water, using electricity from renewable energy to fuel the reaction) that Plug can produce, the company could earn a dollar or more in operating profit. And Rusch predicted that China’s growing supply of solar and wind farms “can be coupled with PLUG technology to offer cost-advantaged hydrogen fuel” to power the fuel cell cars of tomorrow.
Is Rusch right about all this? Should he really be arguing that Plug Power is worth 21 times his estimate of what the company’s “gross billings” might be five years from now — just hours after Plug showed that its “gross billings” have no relation whatsoever to GAAP revenues, and seem to have no relevance to actual profitability of the company, either?
Wall Street appears to agree with Rusch here. PLUG shares have 12 recent analyst reviews, and of those 10 are Buys and 2 are Holds – making the analyst consensus view a Strong Buy. Shares are priced at $45.63, and the average price target of $69.09 suggests the stock has room for ~52% upside growth in the coming year. (See PLUG stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.