Plug Power Is Firing on All Cylinders; Analyst Doubles Price Target

With Joe Biden the President-elect, the commonly held view is that alternative energy stocks are in line for a boost. That said, some in the sector hardly need a helping hand, in particular Plug Power (PLUG).

The hydrogen fuel cell maker has made the most from investors’ thirst for new energy stocks in 2020, in the process racking up a massive 533% of share gains throughout the year.

Further adding to the bullish case, the company just released another excellent quarterly financial report.

In Q3, revenue hit $106.99 million amounting to a 79.9% year-over-year increase and beating the estimates by $1.23 million. PLUG posted a beat on the bottom line, too, with Non-GAAP EPS of -$0.04 coming in $0.03 ahead of the estimates.

Furthermore, the outlook remains positive. PLUG raised its FY20 gross billings estimate to between $325 and $330 million from $310 million. Street was calling for $314 million.

Oppenheimer analyst Colin Rusch is “encouraged” by the increasing adoption of the company’s forklift solutions and excited by PLUG’s bullish stance on its solutions’ potential to substitute diesel gensets and provide back-up power for data center applications.

While Rusch admits PLUG’s massive share gains might raise questions regarding a hot valuation, they are not enough to detract from the bullish case.

“As investors look for exposure to hydrogen vehicle growth, we believe PLUG is best positioned to benefit from all key areas in the supply chain with differentiated, commercially proven technologies,” the 5-star analyst said. “We believe valuation is the biggest question for investors as the market negotiates growth multiples in the context of potentially stable tax policy and historically low interest rates. Given the scale of the opportunity and PLUG’s IP portfolio, we are raising our PT multiple in line with disruptive technology peers and current market dynamics as we maintain our constructive stance on shares.”

The price target raise is a significant one — doubled from $13 to $26. The new figure implies a 15% upside from current levels. As a result, Rusch keeps his Outperform (i.e. Buy) rating on Plug Power shares intact. (To watch Rusch’s track record, click here)

Plug Power’s rise offers analysts an interesting conundrum. On the one hand, based on a decisive 10 Buy ratings with no holds or sells, the analyst consensus is a Strong Buy. However, the constant share gains mean the $20.89 average price target indicates a modest ~4% upside 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.