Has momentum stalled for Plug Power (PLUG)? 2021 is proving a bit of a come down for this previously high-flying new energy stock. To wit, since peaking at $70.3 in mid-January, the share price has retreated by a hefty 64%. The hydrogen fuel cell maker’s pullback has been part of a wider trend as growth stocks have taken a breather, but investors have also found reasons for concern due to a more specific issue.
In March, the company announced it will need to refile its fiscal 2018–2019 financial results along with some recent quarterly statements, after an audit found non-cash related errors while the company was getting its 10-K filing ready. After which, the stock continued its slide.
What this has created, according to Evercore ISI’s James West, is an investment opportunity.
“While the stock has been depressed due to recent accounting and reporting issues,” the analyst said, “We believe the current price (below $30) represents an attractive entry point for a company with significant long-term franchise value and presence in a rapidly growing market.”
As West notes, it is not just the low share price that is enticing, but PLUG’s positioning in a potentially lucrative industry.
Between now and 2030, West expects hydrogen to become more commercially viable and the analyst thinks H2’s “greater potential should unfold after 2030.”
“This sanguine, long-term view should allow PLUG to achieve 3-4% share in a +$250B market in 2030,” West noted.
Currently, PLUG derives most of its revenue from the material handling business, but in a decade, says West, the company will go through a makeover. This is because PLUG is broadening its remit by entering other markets, ones in which hydrogen applications have become “competitive with emissions-intensive products and processes.” For instance, hydrogen fuel cells could be used to power data center servers – a task Microsoft successfully pulled off in a test last year.
As a result, West believes several commercial opportunities could arise this year as the company builds partnerships or signs JV agreements.
The analyst summed up, “We view PLUG is a strong company with a defensible and growing business with long-term franchise value.”
Accordingly, West initiated coverage of PLUG with an Outperform (i.e. Buy) rating and $42 price target. The implication for investors? Upside of 67%. (To watch West’s track record, click here)
West’s 12-month objective for PLUG stock is on the conservative side when pitted against his colleagues’ expectations. Going by the $54.27 average price target, the shares are anticipated to soar ~116% over the next 12 months. All in all, the stock boasts a Moderate Buy consensus rating, based on 10 Buys, 5 Holds and 1 Sell. (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.
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