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Street Thinks PLUG has Enough Fuel for the Future
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Street Thinks PLUG has Enough Fuel for the Future

The global issue of environmental degradation by carbon emission stems majorly from the production of energy from fossil fuels. The gravity of the issue has led the tech world to come up with alternative energy production techniques, also known as green energy.

As the world slowly but surely transitions away from fossil fuels to renewable, clean energy, numerous green energy stocks are gaining momentum. One of them is the alternative energy technology provider Plug Power (NASDAQ: PLUG).

Growing Popularity of Hydrogen Fuel Cell

Plug Power focuses on designing, developing, and marketing hydrogen fuel cell systems for niche markets such as material handling and stationary power. Hydrogen fuel cell technology is a particularly significant solution for sources of clean energy such as electricity.

This particular technology enables the production of massive volumes of clean electricity, using much less space, compared to fossil fuel-sourced electricity. Hydrogen fuel cells are slowly replacing the conventional batteries used for transportation, material handling, backup power for electric grids, etc. Moreover, hydrogen fuel cells reduce the dependence of power grids on huge power plants, thus reducing pollution.

Markets and Markets further affirmed the huge prospects of hydrogen fuel cells. The research firm estimates the global fuel cells market to witness a 5-year CAGR of 26.4% and reach $848 million by 2025. These points show us how favorably Plug Power is positioned to benefit from this industry.

Driving Forces Behind Plug Power

Plug Power’s solid customer roster includes Amazon (AMZN), BMW (BMWYY), Walmart (WMT), and Home Depot (HD), testifying to the reliability of the company. Moreover, various important partnership deals were inked throughout 2021 with key companies such as South Korean company SK Group, oilfield provider Baker Hughes (BHI), carmakers Renault and Edison Motors, integrated logistics platform provider Certarus, Spanish energy firm Acciona Energia, aircraft maker Airbus, and more. A consistent flow of key deals like these is expanding the reach of Plug Power’s technology.

Moreover, Plug Power’s acquisition of cryogenic equipment design company Applied Cryo Technologies in November 2021 is expected to help Plug Power reduce hydrogen infrastructure costs and logistics expenses.

Importantly, the company is focused on its efforts to achieve its target of producing more than half of its hydrogen energy from renewable sources by 2024.

Experts Weigh In

Morgan Stanley analyst Stephen Byrd believes that Plug Power will grow its hydrogen production and electrolyzer businesses rapidly, thanks to active cost reduction efforts and growing customer demand.

“We continue to believe PLUG is one of the best-positioned companies in the hydrogen economy, given their strong balance sheet, scale, and vertical integration strategy, which we believe it can continue to achieve through future M&A (mergers and acquisitions),” noted Byrd.

The analyst reiterated a Buy rating on the PLUG stock and raised the price target to $65 from $43.

The sentiment of the rest of Wall Street resonates with that of Byrd, with a Strong Buy consensus rating, based on 13 Buys and 4 Holds. The PLUG stock forecast indicates a 71.55% upside potential, pinning the average price target at $48.29.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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