Pioneers from any industry face a myriad of challenges as they seek to build a new landscape for clients and consumers. This principle certainly holds true for those looking to make their mark in the hydrogen energy sector, with high costs of physical infrastructure, dependence on governmental policies and regulations, and competition from other technologies and providers all challenging progress.
Navigating the balance between long-term sustainability and immediate financial needs is a challenging task, and Plug Power’s (NASDAQ:PLUG) disappointing Q1 performance serves as the latest indication of the hurdles facing the hydrogen fuels solution provider.
Plug’s Q1 results fell short of expectations, with significant underperformance in both the top and bottom lines. Plug’s revenue was down 43% year-over-year, totaling $120.3 million, a stark contrast to the anticipated $162.6 million. EPS also missed the mark, with losses of $0.47 far greater than the $0.33 that analysts had projected.
Yet, amidst these challenges, there’s a glimmer of hope on the horizon for Plug’s financial prospects. The U.S. Department of Energy’s Loan Programs Office is backing the company with a loan guarantee of up to $1.66 billion. This could inject much-needed capital into the company and potentially facilitate the development of six hydrogen production facilities.
This is welcome news for investors who have seen their positions diluted enormously as the company sought to stay afloat by doubling the number of its shares on the market. However, the question remains: Can Plug remain solvent long enough to enjoy the future benefits of the green future the company is helping to build?
Craig-Hallum analyst Eric Stine believes it will.
“In our mind, PLUG’s commercial stature and momentum is unquestioned,” Stine opined.
Stine is heartened by PLUG’s immediate emphasis on gross margin improvement and cash management, and believes the company is making progress on these two goals. However, the analyst is waiting to see additional improvement before expecting shares to rise dramatically.
Still, Stine holds a bullish long-term perspective on PLUG’s potential, emphasizing, “Plug Power is at the early stages of a large, open-ended growth ramp that is leveraged to the adoption of fuel cell power products and hydrogen production and fueling infrastructure.”
To this end, Stine rates PLUG shares a Buy, along with a 12-month average price target of $5. This represents a 56% upside from current levels. (To watch Stine’s track record, click here)
However, in contrast to Stine, not everyone on the Street is convinced of a turnaround just yet. Plug stock has a Hold consensus rating, based on 11 Holds, 9 Buys and 4 Sells. But the skeptics might as well have said “buy” — because, on average, they believe the stock, currently at $3.20, could surge to $4.96 within a year, delivering a 55% gains. (See PLUG 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.
