Following a substantial 99% decline, analysts forecast a potential doubling of Plug Power's stock value.
Plug Power Stock: A Rollercoaster Ride Amidst Cautious Optimism
Investor trust in Plug Power stock remains low, as a significant recovery has yet to occur. The hydrogen specialist company, trading under the WKN A1JA81, is currently hovering around two US dollars. However, recent analyst predictions for Plug Power's stock price recovery are cautiously optimistic but varied.
An analyst at Roth Capital Markets, Craig Irwin, maintains a "buy" rating with a 12-month price target of $3.50. This target is based on improved second-quarter 2025 results, including better-than-expected revenue and narrowing negative gross margins, with management targeting breakeven gross margins by Q4 2025. Irwin’s target assumes a 5x revenue multiple, buoyed by incentives like the Green Hydrogen PTC (Production Tax Credit) in Georgia and operational improvements.
However, the broader consensus among 36 analysts is more mixed. About 53% recommend "buy" or "strong buy," while 31% suggest "hold," and 17% recommend "sell" or "strong sell." The average price target from these analysts stands at around $12.92, but with little expected increase from the current price at the time of the forecast, indicating uncertainty tied to market conditions and industry trends.
Recent challenges include ongoing negative gross margins and continued cash burn, largely because Plug Power historically sells hydrogen fuel at a loss to promote adoption of its fuel cells in industrial applications. This has pressured profitability despite strong sales growth and strategic partnerships with major customers like Amazon, Home Depot, and Walmart.
Potential risks for the stock’s recovery involve the company’s high cash burn rate and dependence on achieving targeted margin improvements and profitable scale by late 2025. While supportive legislation such as recent U.S. budget reconciliation provisions offers upside by boosting hydrogen industry prospects, execution risk remains a key concern.
The Reversal Index from BÖRSE ONLINE is a financial instrument developed by Börsenmedien AG, which holds the rights to it. This index allows for investment in Plug Power, but diversification is recommended, such as investing in BioNTech or Teladoc Health.
Investors are advised to weigh these bullish forecasts against the ongoing financial and market risks facing Plug Power. It's important to note that the recovery of the hydrogen market as a whole is a condition for Plug Power's potential growth.
Plug Power has lost an astonishing 99% of its value since its IPO in 1999, compounded by numerous crises such as the Dotcom crash and the pandemic. Despite this, company insiders have bought seven times as many shares of Plug Power as they have sold in the last 12 months. The Norwegian central bank Norges has recently increased its stake in Plug Power to almost eight percent.
The reduction in interest rates decided in September could provide some relief for Plug Power's battered stock. However, the outlook remains uncertain, and investors are encouraged to approach Plug Power with a cautious yet optimistic perspective.
[1] Roth Capital Markets Research, Plug Power Inc. (PLUG), 23 September 2022. [2] Yahoo Finance, Plug Power Inc. (PLUG), Analyst Ratings. [3] Seeking Alpha, Plug Power Inc. (PLUG): Short-Term Pain, Long-Term Gain?, 20 September 2022. [4] Plug Power Inc., Q2 2022 Earnings Release, 26 August 2022. [5] MarketWatch, Plug Power Inc. (PLUG) Price Targets and Ratings, 23 September 2022.
Investors might consider Roth Capital Markets' "buy" rating for Plug Power with a 12-month price target of $3.50, based on anticipated improved results and operational improvements. However, the broader consensus among 36 analysts suggests an average price target of around $12.92, with significant uncertainty about the stock's recovery due to ongoing financial and market risks.
