Investors were disappointed with the latest update from Plug Power (PLUG). Last week, the hydrogen specialist said it expects revenue for 2022 to be 5% to 10% below the $900 million to $925 million it called for back in August.
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However, with the company’s fourth annual symposium kicking off this eve (October 18-19), B. Riley’s Christopher Souther says the announcement might have been a good way to clear the decks ahead of the event.
“While the lower guidance is disappointing, we believe it likely sets up the symposium well with the bad news out of the way and likelihood of multiple positive announcements,” the analyst said. “Management has historically used the event to make new customer/ partner announcements, provide long-term goals, and update its market opportunities.”
Souther also notes that despite the lowered outlook, revenue growth will still be at least 60% for the year. Additionally, since the press release implied that the blame lay at supply chain challenges and project push-outs and not necessarily “demand weakness,” any commentary signaling improvements to the supply chain could be “key” in driving positive sentiment.
So, what else will Souther be looking out for?
Information regarding the progress of Plug’s “adjacent market opportunities” such as stationary, electrolyzers, and green hydrogen rather than material handling are of particular interest while the analyst will also be hoping to get more color on “margin expectations,” which are also likely to have a big role in dictating near-term sentiment.
How the company expects the Inflation Reduction Act’s (IRA) to affect long-term targets – both for the top-and bottom-line – will also be another topic to watch out for. The hydrogen provisions – the bill includes a clean hydrogen production tax credit (PTC) that gives up to $3/kg for green hydrogen – is a likely “game changer for Plug and the green hydrogen economy,” which should hasten PLUG’s route to profitability and provide “upside to longer-term targets for both revenue and profitability.”
To this end, Souther rates the stock a Buy, while his $32 price target suggests shares will climb 86% higher in the year ahead. (To watch Souther’s track record, click here)
Looking at the consensus breakdown, 12 others join Souther in the bull camp, and with an additional 6 Holds, the analysts rate the stock a Moderate Buy. There’s plenty of upside projected here; the $34.63 average target provides room for 12-month growth of ~102%. (See Plug Power stock forecast 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.
