On Thursday, Susquehanna reaffirmed its Neutral rating on Plug Power (NASDAQ:PLUG) and increased the price target to $2.50 from the previous $2.00. The stock currently trades at $2.71, with InvestingPro data showing significant volatility with a beta of 1.79.
The revision follows Plug Power's announcement of a record 3 gigawatt (GW) electrolyzer order from Allied Green Ammonia for its green ammonia production. This order, which is contingent upon the customer's final investment decision (FID), began as a Basic Engineering and Design Package (BEDP) and has now advanced into a potential firm order.
This new development serves as a testament to Plug Power's electrolyzer technology, which is gaining recognition among international clients. However, InvestingPro data reveals concerning fundamentals, including a -82.46% gross profit margin and a -25.89% revenue decline over the last twelve months. Susquehanna's analyst highlighted the significance of this order and its implications for the company's standing in the international market for electrolyzers.
In addition to the order, Plug Power is on track to secure the initial portion of its loan guarantee from the Department of Energy (DOE). This financial support is expected to be instrumental in completing the construction of Plug Power's green hydrogen production facility in Texas.
Despite these positive developments, Susquehanna has adjusted its estimates to account for a slower-than-anticipated adoption rate of hydrogen technology. Nevertheless, the increased price target to $2.50 reflects the company's progress in the international electrolyzer market and the anticipated benefits from the DOE loan guarantee.
The analyst's commentary underscores the balance between the slower hydrogen market adoption and the company's individual advancements, maintaining a Neutral stance while acknowledging the potential impacts of these recent developments on Plug Power's financial outlook.
With a market capitalization of $2.47 billion and an overall weak financial health score according to InvestingPro, investors seeking deeper insights can access 12 additional ProTips and comprehensive analysis through InvestingPro's detailed research reports.
In other recent news, Plug Power has made significant strides in the green energy sector.
The company recently announced a landmark deal with Allied Green Ammonia (AGA), positioning Plug Power as a key supplier for AGA's forthcoming green hydrogen-to-ammonia plant in Australia. This agreement includes the supply of three gigawatts of electrolyzer capacity to power AGA's facility, which will produce green ammonia to meet increasing demands in Asia and Europe.
Concurrently, Morgan Stanley (NYSE:MS) reaffirmed its Underweight rating on Plug Power shares, citing the company's potential to receive a crucial $1.7 billion loan from the Department of Energy (DOE). Despite this optimistic outlook, the firm noted that the loan would not immediately resolve Plug Power's high operating losses, estimated to require approximately $500 million in equity financing through the end of 2025.
Furthermore, the Biden administration's decision to relax regulations surrounding a significant hydrogen production tax credit has positively impacted Plug Power. The updated guidelines, which include eligibility for hydrogen produced from various sources to receive the tax credit, are expected to encourage the growth of a domestic hydrogen industry. This development, along with the eased tax-credit rules for hydrogen production, has resulted in a surge in Plug Power's stock.
These are the recent developments surrounding Plug Power, a company committed to advancing the hydrogen economy and supporting the transition to a net-zero emissions future. While these updates underline the company's growth trajectory, investors are keenly awaiting the DOE's final decision on the loan, which could significantly influence Plug Power's financial trajectory.
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