First on our list is Plug Power, a ‘green power’ player designing and manufacturing zero-emission hydrogen fuel cell systems, including the production, storage, and delivery infrastructure needed to build out this new technology to industrial or utility scales. Hydrogen fuel cells use electrochemical reactions to generate usable electric power. The result is a cleaner power source, based on clean, renewable hydrogen – the most common element in the universe.
Plug Power’s hydrogen fuel cell battery products have found uses in both motive and stationary applications, including backup power generation and in warehousing. The fuel cells are growing in popularity with data centers, and have been found to be cost-effective in warehousing, where they are used to power pallet jacks and fork lifts. Other applications include home heating systems and portable electronics. To date, Plug has deployed more than 60,000 power cells for e-mobility, and has become the largest buyer of liquid hydrogen in North America. The company’s customer base includes names such as Amazon, Walmart, and BMW.
The long-term prospects for Plug look good. In today’s cultural environment, which places a premium on both clean and renewable energy sources, Plug can be sure of finding both political and social support. Short-term, however, the picture is less rosy, and PLUG shares are down 67% over the last 12 months.
At least part of the reason can be seen in Plug’s recent quarterly earnings reports. The company is simply not hitting the revenue expectations. In the last report, from 4Q22, Plug reported a top line of $221 million – that was up 36% year-over-year, but it missed the $277.3 million forecast by a 20% margin. Worse, the company’s annual net diluted EPS loss worsened y/y, from -$0.82 cents to -$1.25.
On a positive note, Plug does have plenty of business lined up going forward. The company came out of 2022 with a solid backlog of work, in both the hydrogen production electrolyzer business and in hydrogen liquefaction orders.
The backlog and the prospect for continued orders building up momentum going forward form the base for Wolfe analyst Steve Fleishman’s positive view of this stock.
“Plug closed 2022 with a miss on revenue but saw its backlog jump 27% in the quarter on increasing demand for electrolyzers, fuel cells, and liquefiers. We see a lot of positive momentum to come over 2023 for PLUG as hydrogen investment rises and there is more clarity on the IRA incentives and hydrogen hubs, though execution will be key this year,” Fleishman opined.
Anticipating that Plug will be able to execute, Fleishman rates the shares as Outperform (i.e. Buy) and sets a price target of $25, suggesting a one-year upside of ~138%. (To watch Fleishman’s track record, click here)
Overall, Plug has been generating plenty of buzz, and has 22 reviews from the Street’s analysts. These include 16 Buy recommendations and 6 Holds, for a Moderate Buy consensus rating. Overall, the Street sees an impressive 138% upside potential here, based on the average price target of $25.14. (See PLUG stock forecast)
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