While hydrogen fuel-cell systems specialist Plug Power (NASDAQ:PLUG) was a hot meme trade during the initial year of the Covid-19 crisis, PLUG stock has lost significant momentum since February 2021. Nevertheless, sentiment toward the enterprise remains cautiously optimistic, as evidenced by Craig-Hallum’s latest assessment.
Earlier Monday, analysts led by Eric A. Stine lowered their price target of PLUG stock to $5 from $6 while maintaining a “buy” rating. Plug Power benefits from tailwinds pushing the company toward a positive outcome. Earlier this year, Reuters reported that the hydrogen specialist was working to secure a $1.6 billion loan facility with the U.S. Department of Energy.
That would be a significant catalyst as the company has been facing liquidity issues. As Jefferies analyst Dushyant Ailani remarked, the initial momentum of PLUG stock — which saw it gain about 20% in the trailing five sessions — likely reflected optimism about the underlying enterprise’s ability to close the funding deal.
Still, the expert saw financial challenges ahead. Specifically, Ailani noted that cash generation was going to be limited “given the capital intensity of green hydrogen build outs.” By his estimates, Plug Power could burn cash through 2028.
Financial Considerations Cloud Optimism in PLUG Stock
Last week, Plug released its earnings report for the fourth quarter of 2023. On the bottom line, the company reported a loss per share of $1.08, well below the estimated loss of 37 cents. For revenue, Plug also disappointed, posting $222.16 million against a consensus target of $235.22 million.
To Truist Securities’ Jordan Levy’s point, there was “little new information” that the hydrogen specialist provided. Instead, the analyst stated that management only gave “high-level commentary” on expectations for this year. As well, Levy voiced financial concerns about PLUG stock, noting that the underlying company may have some ways to go before achieving its 70% cash-burn-reduction target.
Both Levy and Ailani rate PLUG stock as a “hold” and carry the same $4 price target.
On the other side of the spectrum, JPMorgan Chase’s Bill Peterson stated that management achieved a “mild positive” by removing prior going-concern language. Nevertheless, the expert is worried about performance expansion, only seeing “modest” revenue growth this year.
Still, what has kept PLUG stock moving in the market is the broader upside potential. According to Precedence Research, the global hydrogen fuel cells market reached a valuation of $4 billion in 2022. By 2032, the sector could be worth $39.86 billion, representing a compound annual growth rate (CAGR) of 25.9%.
Why It Matters
Currently, analysts rate PLUG stock as a consensus hold. This assessment breaks down as seven buys, 14 holds and three sells. Overall, the average price target lands at $5.25, implying about 38% upside potential. The most optimistic target comes from H.C. Wainwright, which sees a per-share price of $18.
On the date of publication, Josh Enomoto did not have (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.
