Plug Power (PLUG) is a promising contender in the hydrogen energy industry, known for its comprehensive green hydrogen ecosystem. The company’s industry-leading 95MW of global proton exchange membrane (PEM) electrolyzer systems and deployment of 13 hydrogen refueling stations across Europe in the past two years are impressive feats. However, the company has posted consistent quarterly operating losses and missed revenue and earnings expectations, and the stock is down over 52% year-to-date. In other words, the company lacks a positive charge.
While the long-term picture looks promising, investors may want to hold off and look for signs of financial progress before establishing a position in this stock.
Plug Power Has Ambitious Plans
Plug Power develops hydrogen fuel cell systems such as GenDrive, a hydrogen-fueled PEM fuel cell system for electric vehicles, and GenSure, a stationary fuel cell solution catering to the telecommunications, transportation, and utility sectors.
Additionally, PLUG produces electrolyzers and liquefaction systems for clean hydrogen production and distribution. The company’s products are sold through direct sales, OEMs, and dealer networks.
Plug Power has deployed over 69,000 fuel cell systems and 250 fueling stations – more than any other organization globally. The company has ambitious plans to create a green hydrogen highway across North America and Europe, with operations slated to become commercial by the end of 2028. Plug has built an advanced Gigafactory to produce electrolyzers and fuel cells as part of this endeavor.
In a strategic move to boost the company’s operational efficiency and profitability, Plug has recently appointed Dean Fullerton, an industry veteran from Amazon, as its new COO. His expansive 14-year experience in global engineering services and leadership in Amazon’s hydrogen economy team aligns perfectly with Plug’s mission and adds another layer of expertise to the firm’s executive team.
Plug’s Recent Financial Results & Outlook
The company recently announced its Q2 2024 results. Revenue was $143.4 million, which fell short of analysts’ estimates of $188.15 million. PLUG realized a net loss of $262.3 million, driven by strategic investments, market fluctuations, and non-cash charges totaling approximately $86 million, and reported earnings per share (EPS) of -$0.36, missing analysts’ estimates of -$0.32.
However, during the quarter, Plug Power became one of the first companies to use the Clean Hydrogen Production Tax Credit (PTC) for its liquid hydrogen plant in Georgia. The plant was able to increase production capacity alongside strategic price increases for its hydrogen products, illustrating its ability to leverage production capacities for improved financial performance.
To further finance its activities, the company has priced a public offering of approximately 78.74 million shares of common stock at $2.54 per share, raising roughly $200 million of fresh capital that will be used for general corporate purposes.
Management has offered guidance for 2024, projecting revenue between $825 million and $925 million.
What Is the Price Target for PLUG Stock?
The stock has been on a volatile, multi-year downward trend, shedding over 91% of its value while posting a beta of 2.57. It trades at the bottom of its 52-week price range of $2.21 – $13.17 and demonstrates ongoing negative price momentum, trading below its 20-day (2.66) and 50-day (2.77) moving averages. Despite the price drop, its P/S ratio of 2.02x aligns with the Electrical Equipment & Parts industry average of 1.8x.
Analysts covering the company have taken a cautious stance on the stock. For example, Truist analyst Jordan Levy recently reiterated a Hold rating while lowering the price target on the shares from $3 to $2. He noted the company’s Q2 earnings miss and believes it still has a considerable way to go to demonstrate it is on the right track to profitability.
Plug Power is rated a Hold overall, based on the recommendations and price targets recently issued by 21 analysts. The average price target for PLUG stock is $4.39, representing a potential 105.14% upside from current levels.
The Big Picture on PLUG
Plug Power has made significant strides in the hydrogen fuel industry, building an industry-leading hydrogen ecosystem. However, its financial stability is a concern as it struggles with persistent operating losses, missed revenue expectations, and a significant drop in stock value this year.
Despite these challenges, the company’s ambition for a green hydrogen highway, expansive product portfolio, and strategic leadership appointment points to potentially promising results. Investors might want to stay on the sidelines and watch for signs of financial improvement before establishing a position in this stock.
