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Despite Challenges, Plug Power Stock Is a Long-Term Winner

support@smarteranalyst.com (Ben Mahaney)

There are high hopes for the renewable energy sector, one on which Plug Power (PLUG) is attempting to leave its mark.

Yet, the hydrogen fuel cells specialist delivered mixed Q120 earnings results last week. On the plus side, PLUG brought in a record number of gross billings which totaled $43 million and exhibited year-over year growth of 89%. At the other end of the scale, the company missed on the bottom line, posting Q1 GAAP EPS of -$0.12 - $0.02 below the estimates.

The company has set an ambitious 2020 goal for gross billings to reach over $300 million, one which B Riley analyst Christopher Van Horn believes “could see some volatility due to recent events around COVID-19.”

However, Plug Power’s long-term goal is one which Van Horn can get behind. The analyst said, “We remain confident that the company can achieve their 2024 target of $1B in gross billings and $200M in adjusted EBITDA. New award activity was robust in 2019 and into 2020 and we believe there is strengthening demand for its technology in core material handling markets, as well as lateral opportunities in on-road applications.”

Van Horn believes there will be more awards from “various end markets,” throughout 2H20 and maintains PLUG has a strong pipeline. But the analyst is most excited by an announcement made during the earnings call. Plug Power has set its sight on two new acquisitions which should “drive both revenue and margin growth to help meet 2024 goals.”

The first concerns the purchase of United Hydrogen, which will boost the company’s hydrogen generation and distribution potential. The second concerns an intention to acquire an electrolyzer company which could provide Plug Power with access to electrolyzer products ranging from 100kw to more than 1MW. Plug Power management expects to close both deals by the end of the second quarter.

To this end, Van Horn reiterates a Buy rating on PLUG shares along with a $6 price target, which implies a solid upside of nearly 40%. (To watch Van Horn’s track record, click here)

Most of the Street agrees with Van Horn. The analyst consensus rates PLUG a Strong Buy, based on 5 Buys and a single Hold. There’s upside of 42%, should the $6.13 average price target be met over the next 12 months. (See Plug Power stock analysis on TipRanks)

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