Plug Power is a Buy, says Roth

It’s been a long way down for Plug Power’s (Plug Power Stock Quote, Charts, News, Analysts, Financials NASDAQ:PLUG) share price over the past couple of years, but investors should be feeling charged up about the stock, according to Roth Capital Partners analyst Craig Irwin. Reviewing the company’s latest quarterly results in a Wednesday update to clients, Irwin reiterated a “Buy” rating and $13.00 target on Plug Power, good for a projected one-year return at press time of 62.3 per cent.

Fuel cell systems company Plug Power reported its first quarter 2023 earnings on Wednesday, coming in with revenue up 49 per cent year-over-year to $210.3 million. (All figures in US dollars.)

The company laid out its 2023 Roadmap, which includes reaching full capacity of 100MW per month of electrolyzer stacks at its Gigafacory, ramping up liquid green hydrogen at its Georgia plant to 15 tons per day (TPD) and constructing another 150-170 TPD of hydrogen plants to reach its total target of 200 TPD.

Management said it expects gross margin improvement as the expansion of its hydrogen generation facilities continues. The 2023 guidance called for revenue of $1.2-$1.4 billion (versus the prior guidance of $1.4 billion) with gross margins of $50-$140 million.

“Based on learnings in Georgia, presently it takes six months to get plants from commissioning to full production. Plug’s green hydrogen generation network buildout should accelerate the energy transition while driving meaningful margin enhancement for Plug,” the company said in a shareholder letter.

On the Q1 numbers, Irwin said revenue at $210.3 million compared to his estimate at $245.0 million and the consensus call at $205.1 million, while operating EPS at negative $0.32 per share was larger than his expected negative $0.26 and the Street also at negative $0.26 per share.

On the offered guidance, Irwin noted that management’s expectation for 2023 now implies four to ten per cent full-year gross margin versus management’s previous guidance at ten per cent.

“Plug liquidity concerns [on Tuesday] were overblown, in our view, given $2.4 billion cash and investments on the balance sheet, ample stimulus funding for green hydrogen, and the ability to pivot investment priorities around a well diversified long-term model,” Irwin said. 

“The gross margin headwinds were already well known, but investors likely remain concerned about short-term expectations until at least a couple of the new green hydrogen facilities are fully commissioned,” he wrote.

The analyst has made no changes to his 2023 revenue forecast, calling for $1,350.0 million, while his EPS forecast went from negative $0.95 per share previously to negative $1.09 per share.