Plug Power's stock momentum cools as Wall Street still has these questions

By Emily Bary

Analysts still have concerns about margins, revenue growth and cash burn in the wake of Plug Power's latest earnings

Plug Power Inc.'s post-earnings stock rally was cooling Monday as several analysts expressed caution about the alternative-energy company's path forward.

Plug Power shares (PLUG) gained 10% in Friday trading but were off about 4% early in Monday's session. Jefferies analyst Dushyant Ailani said that initial momentum likely reflected optimism about the company's eventual ability to close on Department of Energy funding, but he still saw some financial challenges ahead.

See also: Plug Power resolves 'going-concern' issue, but latest results underwhelm

"We expect the market will watch for DOE announcements," he wrote, though he said Plug Power's "cash generation is going to be limited in our view given the capital intensity of green hydrogen build outs." By his estimates, Plug Power could continue to burn cash through 2028.

Ailani rates the stock at hold with a $4 target price.

Truist Securities analyst Jordan Levy commented that there was "little new information" in Plug Power's Friday morning earnings report, as the company only gave "high-level commentary" on expectations for 2024.

Further, despite the stock's positive momentum over the past two sessions, Levy sees "a long way to go for [Plug Power] to hit its 70% cash-burn-reduction [target]," and he expects the company will need to sell more stock under an at-the-market issuance plan in the coming weeks or months.

"While a potential DoE loan announcement could cause a brief spike in shares, we look for more signs of execution to gain confidence in the [long-term] viability of the mode," Levy wrote, while keeping his hold rating and $4 target price on the shares.

JPMorgan's Bill Peterson added that it was a "mild positive" that Plug Power was able to eliminate going-concern language, but he was still worried about his expectation that the company will see only "modest" revenue growth this year.

"We think a 'step change' margin improvement is unlikely to occur this year on the basis of internal hydrogen supply alone," he added.

-Emily Bary

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03-04-24 1008ET

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