Plug Power: Canaccord Halves Price Target After Q1 Results

On June 22nd, Plug Power (NASDAQ: PLUG) announced their first-quarter results, The company announced net revenues of $71.96 million, up 71% year over year. The company had a gross loss of $12.17 million and a net loss of $60.74 million. The stock reacted favourably ending the day up almost 14% to $34.02.

Two analysts downgraded their 12-month price target on Plug after the earnings results, this brought the consensus price target down from $47.31 to $45.40, which is a 33.5% upside. Plug has 20 analysts covering the name, with three analysts having strong buy ratings, nine having buy ratings, seven have hold ratings and a single analyst has a sell rating. The street high comes from H.C Wainwright with a $78 price target and the lowest comes from Citic Securities with a $15.21 price target.

In Canaccord’s note, they downgraded Plug Power to a hold rating from a buy rating and more than cut their 12-month price target in half to $31 from $68. Canaccord’s note consists of only 8 bullet points explaining their rationale for the double downgrade.

They believe that Plug is now transitioning to an operational phase which means that the company now needs to prove itself to “justify its healthy valuation.” They believe that the company now needs to demonstrate profitability and assigned it a 12.5x ’24 sales estimate.

Although revenues generally came in line with Canaccords expectations, the losses were wider than expected. They believe that the costs are trending higher due to their split focus by trying to execute multiple projects simultaneously. They write, “our main concern is the higher COGS with several manufacturing sites ramping. We believe cost controls may take a bit of time to grow into.”

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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