Plug Power Stock: Set up for Long-Term Growth, Says Analyst

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Never one to shy away from an announcement or two, at a recent annual symposium, Plug Power (NASDAQ:PLUG) announced that it had reached an agreement with Fortescue to be the preferred supplier for 550MW PEM electrolyzers for its Gibson Island project in Brisbane, Australia.

The terms of the MOU (memorandum of understanding) also stipulate that Plug and Fortescue will assess potential joint investments in projects aimed at producing green hydrogen in North America. Additionally, both parties are exploring opportunities to work together on more extensive projects worldwide.

This latest deal, according to Northland analyst Abhishek Sinha, supports the hydrogen specialist’s “long-term growth.”

That is certainly what Plug Power has in mind because the company also said it expects to reach revenues of $6 billion by 2027 and $20 billion by 2030, all while also anticipating respective gross margins of 32% and 35%.

Closer to the here and now, for 2023, the company said it expects to generate revenues of approximately $1.2 billion. This falls at the lower end of its previous guidance for revenue, which ranged from $1.2 billion to $1.4 billion, and below the Street’s expectation of $1.28 billion.

However, this is not much of an issue for Sinha. “While the pullback on 2023 guidance was a disappointment, we believe 2023 is an inflection year, and growth should take off in 2024 and beyond,” says the analyst. “The majority of the growth in the next 18 months is going to come from equipment sales.”

Sinha also notes that expectations of attaining break-even for operating margins have already been pushed out by the company from 2H2023 to 2H 2024. Additionally, as its Georgia plant ramps up to full capacity and enables PLUG to slash its fuel margin loss by half from Q2 to Q4, the company sees margins picking up in Q4.

All told, Sinha remains one of the Street’s most vocal PLUG supporters, and along with reiterating an Outperform (i.e., Buy) rating, maintained an $18 price target, suggesting shares will post growth of a strong 206% over the coming year. (To watch Sinha’s track record, click here)

Amongst Sinha’s colleagues, 14 join him in the bull camp, and with the addition of 7 who remain on the sidelines, the stock claims a Moderate Buy consensus rating. At $15.40, the average target implies ~162% upside from current levels. (See Plug Power stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. 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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