The investing community has been given a reminder that stocks can move in both directions; Growth names such as Plug Power (PLUG) have borne the brunt, pulling back over the past few weeks.
But according to one analyst, the selloff is creating a great opportunity to get into PLUG on the long side.
Taking advantage of the recent market conditions, J.P. Morgan’s Paul Coster upgraded his PLUG rating from Neutral (i.e. Hold) to Overweight (i.e. Buy). Coster’s price target remains $65 a share, implying upside of 55% over the next 12 months. (To watch Coster’s track record, click here)
“In the context of the firm’s many long-term growth opportunities,” Coster said, “We believe the stock is attractively priced at present, ahead of potential positive catalysts, which include additional ‘pedestal’ customer wins, partnerships and JVs that enable the company to enter new geographies and end-market applications quickly and with modest capital commitment.”
Investors have been enamored with PLUG stock over the past year, as it comes with a narrative attached – the promise of the renewable energy sector, and specifically, the part the company stands to play in what is known as the hydrogen economy.
As such, Coster calls PLUG a “story stock, appealing to thematic investors as well as generalists seeking exposure to Renewable Energy growth.”
Any newsworthy headlines could act as potential catalysts, which Coster expects the company to provide in the near-term. In addition to the catalysts mentioned above, Coster believes that in Q2, the company will announce a “large stationary storage deployment with a data center owner.”
Coster says he also might have been underestimating the amount of investment opportunities the company will seek out over the next couple of years. That said, the analyst remains vigilant of overexuberance and his revised projections for 2021 and 2022 remain below the company’s guidance, due to the “risk of executing on so many initiatives simultaneously.”
As far as the danger of growth stocks further retreating amidst a rotation “from momentum into value,” Coster believes investors appear aware of such risks, but most see the company as a “leading contender,” well-positioned to capture market share, as the Hydrogen economy develops over the next decade.
What’s more, as the total addressable market is expected to be in the billions, Coster says the lack of profitability in the near term appears a non-issue to most.
Overall, amongst the cadre of Street analysts, there’s widespread agreement on PLUG’s potential. One each Hold and Sell are outgunned by 11 Buys, resulting in a Strong Buy consensus rating. Given the $62.85 average price target, the forecast is for 60% gains in the year ahead. (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.