Plug Power (PLUG) might have missed the top-and bottom-line estimates in its latest quarterly report but following the Q3’s print, Evercore analyst James West is even more upbeat than before.
“With +$3 billion of net cash on hand, a vertically-integrated product suite, and a quickly growing revenue base, we find few other equities offering similar leverage to the green H2 thematic,” the analyst opined.
Q3’s revenue came in at $143.9 million, a 34% increase on the same period a year ago, although the figure missed the Street’s forecast by $0.92 million. There was also a miss on the bottom-line, as EPS of -$0.19 fell short of expectations by $0.10.
However, PLUG’s outlook appears positive as the company raised 2022’s revenue guidance from $838 million to between $900 Million to $925 Million.
West is now confident PLUG can become “meaningfully profitable” by 2025 and by 2030 expects revenues to increase above expectations.
The company also expects green H2 fuel production costs to decline by 50% by 2025, as over the next 2 to 3 years, the company’s liquid green hydrogen capacity should reach hundreds of tons per day in the U.S and will be “significantly margin accretive” – to the tune of +30% gross margins. As more plants are commissioned, beginning in 1Q22 through 4Q22, West believes margins should start to improve with “incremental accretion.”
PLUG also announced another acquisition; the company is bringing turnkey hydrogen solutions provider Frames Group under the fold. As a result, with the new addition in place, West raised 2022’s revenue estimate to $935 million, slightly above the high-end of guidance.
Further out, the analyst raised 2030’s forecast from $9 billion to $11 billion and explained his reasoning behind the new target: “We believe the higher likelihood of production tax credits in the U.S. for green hydrogen producers within the Build Back Better bill could pull forward years of demand, with PLUG uniquely placed as an integrated renewable hydrogen provider.”
Accordingly, there’s also a new price target; the figure rises from $42 to $50, suggesting shares have room for 14% upside in the year ahead. Unsurprisingly, West’s rating stays an Outperform (i.e., Buy). (To watch West’s track record, click here)
Most analysts back West’s stance; based on 13 Buys vs. 4 Holds, the consensus view is that PLUG stock is a Strong Buy. (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.
