Plug Power's stock loses a bull with company seen in 'triage' mode

By Emily Bary

Seaport downgrades the stock, citing slower-than-expected momentum for clean-hydrogen economy as well as financial pressures

Plug Power Inc. shares have been subject to volatile swings over the past couple months, and now a Seaport Research analyst is recommending a neutral stance.

Seaport's Tom Curran thinks the risk-reward profile for the alternative-energy stock looks "balanced" at current valuations, as he waits for more positive signals about the clean-hydrogen economy and about Plug Power's (PLUG) financial situation.

Curran cut his rating on the stock to buy from neutral Tuesday. Shares of Plug Power, which provides hydrogen fuel-cell technology, were off about 4% in premarket action.

"Development of the clean [hydrogen] economy has remained more hesitant than hoped," Curran wrote in a Tuesday note to clients, citing a recent report from the Hydrogen Council, which is made up of companies focused on using hydrogen to advance clean-energy goals.

That report from mid-December "showed a continued uptrend in the global tally of announced investments, but a further decline in the percentage of announcements that have converted to committed capital," Curran said.

Meanwhile, Plug Power itself is in need of some "triage," in his view.

"Over the rest of 2024, PLUG should be focused on raising its necessary external funding with as little dilution as possible and slashing its cash-burn rate," Curran continued. "While expecting the company to survive this triage period, we think it's far from certain that PLUG will manage to orchestrate the lowest total-cost, optimal solution."

Looking beyond this year, Curran wants Plug Power to focus on regaining Wall Street's trust around financial guidance and ultimately getting on a path to profitability. The company may have burned about $1.85 billion in cash last year, he noted.

While Curran expects that Plug Power's fuel segment, which he dubs its "biggest money loser," will see some of its financial burdens eased this year as three plants ramp to full production, he noted that he's "grown alarmed about the still-unclear problems that have kept the Services division deeply mired in the red."

Of the 32 analysts tracked by FactSet who cover Plug Power shares, 10 have buy ratings, 18 have neutral ratings and four have sell ratings, with an average price target of $5.85, which is 35% above current levels.

The name is polarizing among analysts, with a Roth MKM analyst recently turning bullish and a BMO Capital Markets analyst recently moving to a bearish stance.

-Emily Bary

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02-06-24 0822ET

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