Plug Power (NASDAQ:PLUG) stock has continued its bullish run, posting an impressive 1,102% increase over the past year. The hydrogen cell developer has kept analysts busy, toppling their 12 month price target expectations. Plug Power’s sheer operating scale makes it the largest liquid hydrogen consumer in the world. The stock has been strongly influenced by Wallstreets bullish movement towards the next generation Hydrogen economy. Moreover, an industry that could provide $2.5 trillion in direct revenues in 2050 according to the Bank of America. So let’s breakdown what analysts are saying about Plug stock and analyse the companies forecasts moving into the new age of zero carbon energy.
What are analysts saying about Plug stock?
The average 12 month price target for PLUG stock is currently $51.46 a share, up from $37 a share in January. To put the bullish sentiment shift into perspective, since our last article on PLUG in August the average price target from analysts has increased by 320%. We rarely see analysts update their 12 month price targets this consistently, suggesting Plug stock is outdoing analyst expectations.
Price Targets from Institutional Analysts
1/12/2021 Truist – analyst Tristan Richardson dramatically lowered the companies price target coverage from $80 a share to $42. Truist currently maintains a Hold rating on Plug Power stock. The catalyst of the downgrade was Plug Power’s announcement regarding re-stating their financial statements from 2018-2020.
“We have been generally constructive on the company’s fundamental outlook long-term… (But) following these disclosures we expect limited opportunity for outperformance in the near-term.” said Richardson in a note to investors.
3/8/2021 JP Morgan Chase & Co – analysts upgraded their company rating from Neutral to Overweight. JP Morgan currently has a 12 month price target for Plug Power at $65 a share, suggesting an upside potential of 23% from the current trading price. The overweight rating and bullish price target illustrates the institutions bullish positioning on Plug Power stock.
2/3/2021 Sanford C. Bernstein – analysts initiated coverage with a price target at $75 a share, an upside potential of 42% from its current trading price. The company also has an overweight rating on Plug Power stock, cementing confidence for investors Plug Power will outperform its sector.
1/28/2021 B. Riley – analysts boosted the price target from $79 to $83 a share. This suggests an upside potential of 58% from the current trading price. Analysts at B. Riley commented on the recent downtrend in the share price as another buying opportunity. The boosted price target makes it the highest price target across Wallstreet analysts.
How did Plug Power perform in the current quarter?
Firstly, Plug Powers annual performance saw the company post a negative revenue of $100 million. Now you may ask how this is possible? Plug Power had issued certain warrants in the past to customers as a rebate of sorts. These warrants let customers of Plug Power such as Amazon and Walmart, execute PLUG stock at a very low price (locked in price) compared to its current valuation. Now the value of these warrants has far exceeded the purchases made by Plug Powers customers due to the sheer growth in the stock price, resulting in a negative revenue from an accounting perspective. This Nasdaq article goes into more detail regarding the warrants issued by Plug Power.
However, Plug Power also reported record gross billings last year, with $96.3 million in Q4 and $337.4 million annually.
What are the revenue forecasts moving into 2021 and beyond?
Revenue forecasts from analysts look steady moving into 2021. The average revenue forecast for Plug Power in 2021 is $466.4 million according to Yahoo Finance data. In addition, Plug Powers revenue is expected to grow even further to $715.46 million in 2022. The long term revenue expectations from analysts remain positive. By 2024, PLUG is expected to post $1.7 Billion in annual revenue.
The Q2 2020 results also affirmed the revenue guidance for 2024, increasing their expected operating income to $200 million and an adjusted $250 million EBITDA. In contrast, the EPS predictions for 2021 are conservative, with an expected improvement of 17% YOY however this is subject to change upon further guidance.
*Due to recent discrepancies in Plug Powers earnings this data may be updated if required after Plug Power release the updated quarterly earnings from 2019-20. The company has stated the revenue/billings outlook will not be impacted by the revised earnings statements. For more information regarding the current concerns surrounding the results see here.
What’s in the pipeline for 2021 and beyond
Plug Power are moving 30% of the retail food and groceries in the United States as they are assisting retail giants such as Walmart, Amazon, Kroger, SuperValu, Wegmans, and Aryzta. The scale of PLUG is impressive, especially if you dive deeper into its vertical integration strategy. Plug Power has been able to concrete its roots deep into the Hydrogen industry, through acquiring their main hydrogen suppliers.
- Set to Build North America’s Largest Green Hydrogen Production Facility in Western New York.
- Plug Power and Universal Hydrogen have further extended their partnership to enable Universal Hydrogen to complete the construction of a subscale aircraft powertrain by Q2 2021. The companies also agreed to a global offtake relationship that will see green hydrogen become cost-competitive with jet fuel by 2025.
“With the acquisitions of United Hydrogen and Giner ELX, Plug Power is now positioned to be a global leader in generation, liquefaction and distribution of green hydrogen fuel”
Summarising Plug Power outlook
In conclusion, there is no doubt Plug Power has a strong bullish sentiment from analysts and smart money institutions. However the sustainability of Plug Powers short term momentum remains up for debate. The negative revenue result saw the stock fall before finding equilibrium at $52 a share. Long term investors will key in on the industry growth and any guidance changes as they approach 2024. We will continue to follow Plug Power as they lead the charge into an exciting new era of zero carbon power.
Written by Tyger Fitzpatrick
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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