Upgraded Plug Power Offers Exposure to Hydrogen Vehicle Growth

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It’s funny how Wall Street will hate a stock one day, then love it the next day. Hydrogen fuel cell company Plug Power (NASDAQ:PLUG) has been the object of love, hate and everything in between. Meanwhile, Plug Power stock remains at the center of ongoing, and often heated, debate.

a symbol with H2 (hydrogen) on it and a fill-up tank Plug Power stock
Source: Alexander Kirch / Shutterstock.com

The controversy is understandable when we look at Plug Power objectively. This company has been around for over 20 years and sold plenty of fuel cell systems. On the other hand, Plug Power still isn’t net profitable, and the company has yet to generate a positive free cash flow.

Plug Power stock is also controversial because hydrogen power is an emerging industry. Not everyone buys into hydrogen fuel cells as an investment. And on a political level, a likely change in the presidency in 2021 adds fuel to the fire of an already intense debate.

To make it all the more confusing, analysts on Wall Street have suddenly shifted their tone on PLUG stock. What’s going on here, and how can prospective investors sort all of this out and make an informed decision?

A Closer Look at Plug Power Stock

It’s amazing to consider how quickly the trajectory of Plug Power changed in 2020. Prior to this year, it was classified as a penny stock, which is defined by the U.S. Securities and Exchange commission as a stock trading for less than $5.

Now Plug Power stock is far above the threshold of being a penny stock. Indeed, it trades at more than $22 per share.

At it stands today, Plug Power stock is much closer to its 52-week high of $24.78 than its 52-week low of $2.53. Therefore, value seekers might express concerns about the stock’s relatively high price.

They might also point out that PLUG’s trailing 12-month earnings per share is -29 cents. This negative number seems to be at odds with the vertical movement of the share price.

These statistics might dissuade some folks from buying PLUG, and that’s understandable. That being said, a high valuation and a negative earnings profile need not be deal breakers. As we’ll see, analysts on Wall Street don’t seem to be dissuaded.

Good News, Bad News

Whether Plug Power’s third-quarter earnings data present good news or bad news depends on one’s perspective. I’ll provide you with the facts and let you form your own conclusion.

For the third quarter, Plug Power reported earnings per share of -4 cents. A negative number might not sound great, but in this instance it’s better than the analyst community’s estimate of -7 cents per share. Plus, it represents a 50% year-over-year improvement.

In terms of quarterly revenues, Plug Power posted $106.99 million. The bad news is that this figure missed the estimate of $109.21 million. The good news is that it signifies a huge year-over-year increase of 89.78%.

The Analysts Weigh In

Keep in mind that all of this took place during the third quarter, when a Joseph Biden presidency wasn’t a done deal.

Now that Biden will probably be the U.S. president in 2021, a clean-energy-friendly environment could set the stage for higher prices in Plug Power stock.

It’s likely that a favorable political landscape factored into some Wall Street analysts’ increasingly bullish stance on Plug Power stock. Here are a few highlights for the bulls to enjoy:

  • Analysts at Oppenheimer, led by Colin Rusch, hiked their price target on Plug Power stock from $13 to $23 with the assertion that the company “is among the industry leaders in fuel-cell system design and implementation for the motive market.” Oppenheimer furthermore maintained its “outperform” rating on the stock.
  • Noting the company’s “strong” third-quarter upside, Roth Capital analyst Craig Irwin increased his firm’s price target on Plug Power stock from $13 to $22 while maintaining a “buy” rating.
  • B. Riley Securities analyst Christopher Souther raised his firm’s price objective on Plug Power stock from $18 to $24 while reaffirming a “buy” rating.
  • Craig-Hallum analyst Eric Stine also maintained a “buy” rating on Plug Power stock. Additionally, his firm hiked its price target on the stock from $14 to $26.

The Bottom Line

I’m not suggesting that you should buy Plug Power stock just because the analysts seem to like it now.

Instead, I invite you to weigh the good news and the bad news that I’ve presented to you today. All things considered, an increasingly clean-energy-friendly environment should accommodate higher prices in Plug Power stock.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2020/11/upgraded-plug-power-stock-offers-exposure-to-hydrogen-vehicle-growth/.

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