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Morgan Stanley Pounds the Table on Plug Power Stock

The Plug Power (PLUG) juggernaut has spun into overdrive. The stock has performed one of the year’s most impressive turnarounds, as over the past 3 months, it has climbed 67% higher.

If you think you’ve missed the boat, then think again. According to Morgan Stanley’s Stephen Byrd, the hydrogen specialist’s constant stream of positive developments merits a new price target.

The analyst recently raised the figure from $43 to $65, suggesting room for another 54% surge over the coming months. (To watch Byrd’s track record, click here)

What’s behind the confident reassessment? The analyst explained: “Following several constructive updates, we are more bullish on PLUG’s ability to (1) grow its hydrogen production and electrolyzer businesses at a more rapid rate, due to continued cost reductions and growing customer demand, and (2) capture market share within these businesses.”

Expounding on Byrd’s second point, the analyst expects Plug Power’s cost reductions will lead to greater sales, which in turn will increase scale and “lower per-unit costs,” forming what Byrd terms a “virtuous cycle.”

As for point number one, on the recent 3Q21 earnings call, the company suggested that by 2023 its electrolyzer business revenue could be above that of the material handling segment, and hydrogen production revenue could exceed material handling a year later. “This implies that there is significant upside to the guidance that management outlined at its Symposium back in mid-October,” notes Byrd. This guidance included combined electrolyzer and hydrogen production revenue of $1.5 billion – compared to material handling raking in $1 billion in 2025.

As such, Byrd increased his “cumulative” revenue estimates (2022-30) for electrolyzers by 131% and for hydrogen production by 86%.

If you’re mulling over an investment in this burgeoning space, Byrd thinks PLUG is definitely worth a look. Given the company’s strong balance sheet of more than $4 billion of cash and cash equivalents, its scale and “vertical integration strategy,” Byrd believes PLUG is “one of the best positioned companies in the hydrogen economy.”

So, that’s Morgan Stanley’s view, what does the rest of the Street think? Looking at the consensus breakdown, of the 17 recent PLUG reviews, 13 say Buy while 4 recommend to Hold, culminating in a Strong Buy consensus rating. Shares are expected to change hands for ~14% premium a year from now, given the average price target currently stands at $48.29. (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.