Inside Plug Power’s Newly Added Risk Factors

Plug Power (PLUG) is an American renewable energy company. It provides hydrogen fuel solutions, including fuel cell systems that power vehicles and equipment. Its customers include retailers Amazon (AMZN) and Walmart (WMT), and automaker BMW.

For Q4 2021, Plug Power reported revenue of $162 million, its highest quarterly revenue ever, surpassing the consensus estimate of $157 million. It posted an adjusted loss per share of $0.33, which improved from a loss per share of $1.14 in the same quarter the previous year but missed the consensus estimate of an $0.11 loss per share.

Plug Power recently acquired Joule Processing to bolster its hydrogen liquefaction efforts. It has also partnered with an Atlas Copco unit to jointly set up hydrogen liquefaction plants.

With this in mind, we used TipRanks to take a look at the newly added risk factors for Plug Power.

Risk Factors

According to the new TipRanks Risk Factors tool, Plug Power’s main risk category is Finance and Corporate, with 24 of the total 48 risks identified for the stock. Production and Legal and Regulatory are the next two major risk categories with 9 and 5 risks, respectively. The company has recently updated its profile with four new risk factors.

Plug Power cautions that its earnings and financial condition could be adversely affected if its goodwill was impaired. Goodwill was valued at $220.4 million at the end of 2021. It explains that goodwill is subject to impairment tests on at least a yearly basis and sometimes more frequently if certain events occur.

The company cautions investors that the transition from LIBOR to SOFR as the benchmark interest rate for borrowings could adversely affect its financing costs.

Plug Power is setting up green hydrogen production facilities in the U.S. and Canada. The goal is to address the hydrogen demand for its products from both current and prospective customers. But the company cautions that the timing and cost of completing the projects are subject to many factors outside its control. Therefore, Plug Power warns that its hydrogen production strategy may not be successful.

Finally, Plug Power tells investors that it believes that climate change policies will favor its business. The company explains that sustainability is part of its products and mission. However, it cautions that there is no guarantee that changes in climate change regulations will also favor its existing and future customers.

Analysts’ Take

Evercore ISI analyst James West recently reiterated a Buy rating on Plug Power stock but lowered the price target to $46 from $50. West’s reduced price target still suggests 97.93% upside potential.

Consensus among analysts is a Strong Buy based on 10 Buys and 3 Holds. The average Plug Power price target of $41.15 implies 77.07% upside potential to current levels.

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