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JPMorgan Says Hydrogen Stock Plug Power Trades At 'Steep Price,' Downgrades FuelCell Energy

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Jayson Derrick
·2 min read
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Hydrogen power company Plug Power Inc (NASDAQ: PLUG) is both a first mover and fast mover in the hydrogen fuel cell space, but the stock trades a "steep price," according to JPMorgan.

The Plug Power Analyst: Paul Coster initiated coverage of Plug Power with a Neutral rating and $60 price target.

The Plug Power Thesis: Plug Power has been an early player in the $200-billion electrification of the transportation and logistics market, Coster said in a Thursday initiation note.

The company is able to back up its year of operation with a proven proton exchange membrane technology, a strong balance sheet, and large customers and partners, the analyst said.

This gives the company a compelling path to make $1.2 billion in sales by 2024 and generate a profit, he said. 

In fact, Plug Power's recent SK Group and Renault partnerships could lift its 2024 sales outlook to $1.7 billion, and revenue growth will continue to accelerate in 2025, Coster said. 

Yet JPMorgan's $60 price target is based on a discounted valuation model of 60 times the EV/2025 EBITDA forecast of $534 million.

"Welcome to hydrogen fuel cell investing," the analyst said. 

Related Link: Why Plug Power's Lead In Fuel Cell, Hydrogen Space Could Create 'Outsized Winner'

Why JPMorgan Is Downgrading FuelCell: Separately, Coster downgraded FuelCell Energy Inc's (NASDAQ: FCEL) stock rating from Neutral to Underweight.

The stock is up 70% since the start of 2021 and more than 800% over the last year. Shares are trading at around 50 times price/forward sales and are "richly valued" compared to peers, the analyst said. 

"At this point we expect the stock to underperform the mean of our coverage over the next 6-12 months, though we remain constructive regarding the Alt Energy sector in general." 

PLUG, FCEL Price Action: Shares of Plug Power lost 4.26% in Thursday's session, closing at $66.54, while FuelCell Energy plunged 8.05% to $17.60. 

Photo courtesy of Plug Power. 

Latest Ratings for FCEL

Jan 2021

JP Morgan

Downgrades

Neutral

Underweight

Jan 2021

Jefferies

Initiates Coverage On

Hold

Dec 2020

Canaccord Genuity

Initiates Coverage On

Hold

View More Analyst Ratings for FCEL
View the Latest Analyst Ratings

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