After a visit to the company’s green hydrogen plant in Georgia, Roth MKM analyst Craig Irwin has come away very bullish about Plug Power (Plug Power Stock Quote, Chart, News, Analysts, Financials NASDAQ:PLUG).
In a research update to clients January 31, Irwin upgraded PLUG from “Neutral” to “Buy” and raised his price target on the stock from $4.50 to $9.00.
The analyst says his visit eased his mind about the company’s downside and allowed him to ponder its upside.
“Our visit to the Georgia green hydrogen plant gives us confidence the facility is ramping smoothly and all major technical issues are handled, addressing our prior concerns about backlog and margin visibility,” Irwin said. “Today (31-Jan) is the third day of liquefaction, and we expect the first liquid hydrogen delivery from the facility takes place imminently. Full rate 15 TPD production should be confirmed in the next few weeks.”
The analyst thinks PLUG will post and EBITDA loss of $666.9-million on revenue of $869.2-million in fiscal 2023. He expects those numbers will improve to EBITDA of negative $301.4-million on a topline of $1.1-billion in fiscal 2024.
“We are raising our price target to $9.00 (from $4.50) using a 2.4x multiple on our ’25 revenue estimate of $2.2bn,” Irwin concluded. “We see the 2.4x multiple as fair given the rapidly improving visibility for improved financial performance (driven by direct and indirect H2 economics). We note that PLUG’s 2025 results should reflect an early stage of growth in the context of where various market forecasts estimate 18% to 23% of world energy comes from hydrogen by 2050.Shares of PLUG could see increased volatility due to the high valuation on 2025 estimates, where individual company and industry catalysts, and expectations around catalysts, can both drive material implied changes to long-term hydrogen economy scenarios. Factors that may impede shares of PLUG from reaching our price target include: (1) lower than expected GenDrive shipments; (2) increasing competition in the fuel cell material handling market; (3) material changes in production costs; and (4) a significant change in relationships with customers or suppliers.”
Shares of Plug Power closed January 31 up 19.3 per cent to $4.45.
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