Last week was not a great week for Plug Power (NASDAQ:PLUG) investors. Shares of the hydrogen specialist tumbled after the company’s Q2 report showed its efforts to finally turn a profit look did not take a turn for the better in the quarter.
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The Q2 net loss increased from a loss of $173.3 million, or $0.30/share, in the same quarter a year ago, to $236.4 million, or $0.40/share, while also falling shy of the consensus estimate by $0.14.
There was better luck with the topline. Boosted by growing customers in material handling and the sturdy growth in the cryogenic and liquefaction businesses, revenue increased by 23.7% sequentially and 72% year-over-year to $260.18 million, in turn, beating the Street’s call by $21.73 million.
Based on elevated demand for the electrolyzer, cryogenic, and application businesses, in the second half of the year, Plug anticipates seeing a meaningful uptick for the top line. As such, the company reiterated its full-year revenue guidance of $1.2 billon-$1.4 billion vs. the Street at $1.28 billion.
Margins are also expected to get significantly better, as the company keeps apace with its scaling endeavors, optimizing electrolyzer production, and improving costs. And despite the growing losses, in its shareholder letter, the company stressed it has “clear short-term goals to improve profitability in the second half of 2023.”
With this in mind, Evercore analyst James West reminds investors of the positive events on the horizon.
“We note several upcoming tailwinds for Plug, including the DOE’s Clean Hydrogen Hubs Program, the expansion of the Rochester Gigafactory, doubling the production capacity to 200 MW per month by the end of the year, and the deeper penetration into data centers, BEV charging, green ammonia, steel, and methanol opportunities,” West explained. “Top line growth will continue to accelerate as the business scales, particularly as green H2 production and the Gigafactory ramps towards margin improvement.”
All told, West reiterated an Outperform (i.e., Buy) rating along with a $37 price target. West evidently thinks the shares are significantly undervalued as there’s potential upside of a whopping 306% from current levels. (To watch West’s track record, click here)
Turning now to the rest of the Street, 9 Buys and 4 Holds have been published in the last three months. Therefore, PLUG has a Moderate Buy consensus rating. Based on the $19.23 average price target, shares could rise 111% in the next year. (See PLUG stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
