Plug Power (NASDAQ:PLUG) shares have seen no lift from the 2024 bull market, extending their multiyear decline with a further 56% drop year-to-date.
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Last week, the hydrogen specialist faced another steep sell-off following Trump’s election victory, as investors expressed concerns that regulatory scrutiny could intensify around the hydrogen PTC and the broader Inflation Reduction Act (IRA).
The company’s Q3 report, released this week, provided little relief. Revenue declined 12.6% year-over-year to $173.7 million, falling $36.31 million below Street expectations, largely due to weaker-than-expected equipment sales. Although gross margins improved sequentially from -92% in Q2 to -58%, they still lagged behind the Street’s forecast of -40%. EPS of -$0.25 also fell shy of the consensus estimate – by $0.01.
There wasn’t much to shout about in the outlook either as the company lowered FY 2024 revenue expectations from the prior $825-$925 million range to between $700-$800 million, also below the $804.1 million the analysts were expecting.
That said, BTIG analyst Gregory Lewis keeps a positive stance, highlighting that although hydrogen fuel margin improvements were constrained by scheduled maintenance in Georgia and Tennessee, its fuel business “continues to benefit from internally-sourced volumes as well as the recognition of IRA PTCs (premium tax credits) in Georgia.”
Regarding regulatory concerns under Trump’s administration, Lewis points out that Isaac Boltansky, BTIG’s Washington Policy Analyst, sees “relatively little political risk” for hydrogen, noting that most of the IRA’s tax credits encourage investment and job creation, especially in red and purple states. Management reinforced the optimistic US outlook, highlighting positive developments in the sector during the first Trump administration.
Moving forward, as the Louisiana JV “ramps to full capacity” (expected in 1Q25), Lewis expects fuel margins to “continue to improve into 2025.” PLUG currently has 50-60k fuel cells deployed, indicating an annual hydrogen demand of approximately 50tpd and Lewis reckons that once its first three electrolyzer projects reach full capacity (~40tpd), PLUG could lower hydrogen fuel costs by 40%-50%, vs. sourcing these volumes from third parties.
Bottom line, Lewis rates PLUG shares a Buy with a $5 price target, suggesting the shares could rebound by ~154% from current levels. (To watch Lewis’ track record, click here)
The general Street view is rather more muted. The stock claims a Hold consensus rating based on a mix of 6 Holds and 3 Buys and Sells, each. That said, the $2.51 average target suggests the shares will climb 27% higher over the coming months. (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.
