It has not been the best start to the year for Plug Power (NASDAQ:PLUG). Less than three weeks into 2024 and the shares are down by 49%. In fact, that is not really anything new and just a continuation of last year’s woes; in total, the trailing twelve months have resulted in shares losses of a depressing 86%.
The dismal display in the market reflects real world issues that have kept on plaguing the hydrogen specialist. A select list includes a terrible Q3 prints an alarming rate of cash burn and a going concern warning from management, highlighting the urgent need for more cash in order to keep the business afloat.
The problem, though, according to Susquehanna’s 5-star analyst, Biju Perincheril, is that the outlook is rather bleak too. As such, given “delays related to both PLUG’s green hydrogen production facility buildout and securing external funding sources to finance its growth plans,” Perincheril has downgraded his rating for PLUG from Positive (i.e., Buy) to Neutral. Along with the lower rating, Perincheril has also reduced his price target from $9 to $4.5. (To watch Perincheril’s track record, click here)
“Additionally,” the 5-star analyst expounded, “the recent Treasury guidance on production tax credits was less advantageous than expected and could cause PLUG to shift locations on future production facilities. While we like the company’s end-to-end solutions for the hydrogen ecosystem, we move to the sidelines until there is more clarity on the financing front and more progress on the gross margin front.”
On account of the delays, there are also new estimates. For 4Q23, FY2024, and FY2025, respectively, the revenue forecast is lowered from $427 million, $1.8 billion, and $3.0 billion to $352 million, $1.6 billion, and $2.5 billion. Likewise, Perincheril’s respective EPS forecast for 2023/2024/2025 is brought down from ($1.52)/($0.68)/$0.05 to ($1.53)/($0.71)/($0.16).
Catalysts that could alter the picture include improving margins, securing more electrolyzer wins and forming additional partnership agreements to explore new market opportunities.
Looking at the Street’s overall take on PLUG, its offers something of a contradiction. On the one hand, based on a mix of 15 Holds, 7 Buys and 2 Sells, the stock receives a Hold (i.e. Neutral) consensus rating. However, some remain extremely optimistic; as such, the $8.97 average price target suggests shares will post growth of ~286% in the year ahead. (See Plug Power stock forecast)
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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.
