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Renewable energy stocks’ share gains in 2020 were enormous, and the trend has so far continued in 2021. The tailwinds are manifold; The global risks due to climate change have only come further to the fore during the pandemic, and the cost of renewable energy continues to drop, marking it as not only greener but even cheaper than traditional alternatives. Plus, the new Biden administration has put extra emphasis on the need for clean energy, and government policies will continue to support low-carbon solutions.
Plug Power (PLUG) has been one of the companies to benefit from all the above and the hydrogen fuel cell maker has particularly caught investors’ imaginations. The last 12 months have delivered massive returns (up by 1,317%) and the stock has already nearly doubled this year.
Among the fans is B. Riley analyst Christopher Souther, who rates PLUG shares a Buy along with an $83 price target. This figure indicates further upside of ~31% over the next 12 months. (To watch Souther’s track record, click here)
While Souther tempers expectations for continued outsized gains, and believes the onus is now on PLUG to justify the lofty multiples, the analyst highlights a possible catalyst to drive the stock price higher.
"While execution risk becomes greater in 2022+ as the company enters into multiple end markets outside of the core material handling business, we believe that additional partner announcements are likely to continue to drive upside to the current targets over the next year," Souther opined.
Plug has a growing list of collaborators which have only further enhanced its appeal. A recent $1.5 billion investment from South Korea’s SK Group, and a joint venture with French automaker Renault to advance hydrogen-powered light commercial vehicles, have helped sustain the momentum.
Additional partners could be in the cards, too, says Southern, “particularly on-road vehicles in the U.S. where the company is already laying significant infrastructure with some key customers that could be utilized for long-haul.”
The company also has plenty of cash in the coffers – roughly $4.9 billion - following a recent offering and the SK deal to help it “execute its plans.”
“Shares remain expensive,” the 5-star analyst summed up, “But we continue to see catalysts for upside on strong near-term execution in material handling and additional partnerships that are providing the building blocks for long-term growth.”
Overall, the hydrogen fuel cell king is without question a Wall Street favorite. PLUG’s Strong Buy consensus rating is based on 10 Buys and 2 Hold. With a return potential of 10.5%, the stock's consensus target price stands at $69.82. (See PLUG stock analysis on TipRanks)
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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.