It wasn’t the best start to the year Power Delivery (NASDAQ:PLUG). Less than three weeks into 2024 and shares are down 49%. In fact, this isn’t really anything new, it’s just a continuation of last year’s problems. In total, the trailing twelve months resulted in stock losses of 86%.
The dismal market showing reflects the real-world problems that have been plaguing the niche hydrogen company. The selection includes a dismal Q3 report that prints an alarming rate of cash burn and a warning from management about business continuity, highlighting the urgent need for more cash in order to keep the business afloat.
But the problem, according to 5-star Susquehanna analyst Biju Perincheril, is that the outlook is also bleak. As such, due to “delays related to the construction of PLUG’s green hydrogen production facility and securing external financing sources to fund its growth plans,” Perincheril has lowered its rating on PLUG from Positive (i.e. Buy) to Neutral. Along with the lower rating, Perincheril also lowered its price target from $9 to $4.5. (To watch Perencheryl’s history, click here)
“In addition, recent Treasury guidance on production tax credits has been less beneficial than expected and could prompt PLUG to change locations in future production facilities,” the five-star analyst explained. “While we like the comprehensive solutions the company offers to the hydrogen ecosystem, we We’re moving to margin so that there’s more clarity on the financing front and more progress on the gross margin front.
Because of the delay, there are also new estimates. For Q4 2023, FY 2024 and FY 2025, respectively, revenue forecasts were lowered from $427 million, $1.8 billion and $3.0 billion to $352 million, $1.6 billion and $2.5 billion. Likewise, Perincheril’s EPS forecast for 2023/2024/2025 has been lowered from ($1.52)/($0.68)/$0.05 to ($1.53)/($0.71)/($0.16).
Catalysts that could change the picture include improving margins, securing further gains in the electrolyzer space, and forming additional partnership agreements to explore new market opportunities.
Given the Street’s overall view of PLUG, it presents something of a contradiction. On the one hand, based on a combination of 15 comments, 7 buys, and 2 sells, the stock gets a consensus rating of Hold (i.e. Neutral). However, some remain very optimistic; As such, the average price target of $8.97 suggests shares will deliver roughly 286% growth in the next year. (be seen Energy stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.