Plug Power (NASDAQ:PLUG) stock closed higher by over 9% following an initiation of coverage from Northland Capital Markets. In addition, Sen. Joe Manchin agreed to support an economic bill that includes climate spending initiatives, sending clean energy stocks higher.
JPMorgan analyst Mark Strouse explained:
Details of the bill are not yet available, but based on commentary from the Senators, we expect spending on clean energy (including hydrogen, nuclear and renewables) as well as fossil fuels.
Increased federal spending on hydrogen as an energy source should help PLUG stock, as the company develops hydrogen fuel cell systems.
With that in mind, let’s get into the details of the Northland initiation.
Why Is PLUG Stock Up Today?
Analyst Abhishek Sinha assigned PLUG stock with a “market perform” rating and a price target of $25. While the price target is higher than the current price, Sinha isn’t exactly bullish. He adds that the hydrogen market is “fraught with uncertainties” and that upside for PLUG is limited. He also questions the company’s poor free cash flow visibility.
On the bright side, the analyst said that Plug’s healthy balance sheet should support its growth prospects. So, how do other analysts feel about the hydrogen company?
JPMorgan has a price target of $28, down from $32 in June. Analyst Paul Coster expects margin headwinds in Plug’s fueling and service businesses in the near term. In the second half of the year, Coster expects improvements in these two businesses. The improvements will be driven by Plug’s 70 temperature programmed desorption (TPD), which will be online by the end of the year. For Q2, he expects gross margins of -11.2%. For the full year, he expects gross margins of -1.5%.
Meanwhile, Piper Sandler has a price target of $18. Analyst Kashy Harrison characterizes Plug as an “integrated hydrogen solutions provider.” By 2025, Harrison expects over $3 billion in revenue. This would equate to a compound annual growth rate of 58% between 2021 and 2025. The analyst attributes the increase in revenue to “material handling, electrolyzers, and green H2 fuel sales.” However, he doesn’t expect meaningful earnings before interest, taxes, depreciation and amortizations (EBITDA) until 2025 as well.
Investors will receive more financial information after Plug reports earnings on Aug. 9 after the market close.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.