Plug Power is a Buy from here, says Roth

The stock has had some wind in its sails of late, but there’s still more upside to cleantech company Plug Power (Plug Power Stock Quote, Charts, News, Analysts, Financials  NASDAQ:PLUG), according to Roth Capital Partners analyst Craig Irwin. In a Friday report, Irwin reiterated a “Buy” rating and $13.00 target price, implying at press time a one-year return of 20 per cent.

Plug Power, a developer and manufacturer of fuel cell systems to power forklift trucks, hosted this past week an analyst day at its Gigafactory in Rochester, New York. The company announced a planned deployment of two green hydrogen ecosystems to power European food transport company and pedestal customer STEF’s food distribution centres in Europe, planned to be operational in the first quarter 2024. 

“We have built a vertically integrated hydrogen business that is rapidly gaining traction in the global market,” said Andy Marsh, Plug Power CEO, in a press release. “Our commitment to building, selling and deploying real products has positioned us as a leader in the green hydrogen industry. We have the expertise and capability to meet the growing demand and get green hydrogen up and running successfully for customers.”

Irwin commented that PLUG’s green hydrogen buildout is on track, with its updated plans to produce 850 TPD, generating 2.2 GW of power in Finland by 2030. That’s part of the company’s overall goal to deploy 1.5K TPD in Europe by 2030. 

“Plug’s Analyst Day gave confidence the company remains focused on its longer-term mission, and in our view, managment is doing a good job handling diverse business initiatives,” Irwin said. 

“Recent strength reflects optimism the Georgia green hydrogen facility will report positive production this next month, and we see gross margins as the most important metric to monitor. Green hydrogen plant construction timelines may have slipped to the right, but we still expect completion in around a year while others have taken around five years for legacy facilities,” he said.

With the update, Irwin left his financial projections unchanged, calling for Plug Power’s topline to go from $701.4 million in 2022 to $1.350 billion in 2023 and to $1.975 billion in 2024. EPS is expected to go from negative $1.18 per share in 2022 to negative $1.09 million in 2023 and to positive $0.25 per share in 2024. (All figures in US dollars.)

“We maintain our $13 price target, using a 10x multiple on our 2025 EBITDA estimate of $760 million. We see the 10x multiple as fair, balancing sector weakness with the expectation that PLUG’s 2025 results should reflect an early stage of growth in the context of where various market forecasts estimate 18 per cent to 23 per cent of world energy comes from hydrogen by 2050,” Irwin said.