Plug Power Inc (PLUG) Amazes The Street With New Game-Changer Deal


Plug Power Inc (NASDAQ:PLUG) investors should be smiling from ear to ear today following the news that the fuel cell maker has reached an agreement with Amazon.com, Inc. (NASDAQ:AMZN) to utilize Plug Power fuel cells and hydrogen technology in its fulfillment network. At select fulfillment center locations, Amazon will begin powering its industrial equipment such as forklifts using the GenKey technology which will enable faster charging times, reduced costs, and support energy-efficiency in Amazon’s fulfillment operations. Revenues associated with the commercial agreements are expected to be around $70 million in 2017.

Plug Power shares reacted to the news, jumping 80% to $2.35 in early trading Wednesday.

“This agreement is a tremendous opportunity for Plug Power to further innovate and grow while helping to support the work Amazon does to pick, pack and ship customer orders,” said Andy Marsh, CEO of Plug Power. “Our hydrogen fuel cell technology, comprehensive service network, and commitment to providing cost-savings for customers has enabled Plug Power to become a trusted partner to many in the industry and we are excited to begin working with Amazon.”

Additionally, Amazon and Plug Power will begin working together on technology collaboration, exploring the expansion of applications for Plug Power’s line of ProGen fuel cell engines.

Plug Power has granted Amazon warrants to acquire up to 55,286,696 of Plug Power’s common shares at $1.1893 per share (Exercise Price), which is based on the volume weighted average closing price of Plug Power common shares for the thirty trading days ending April 4, 2017.  Vesting of the warrants is tied to payments totaling $600 million in the aggregate made by Amazon, directly or indirectly, in connection with the purchase of goods and services from Plug Power.  An adjustment to the Exercise Price will occur after the first 34,917,912 warrants have vested, and will be based on the volume weighted average closing price, at the time that such warrants vest.

On the ratings front, PLUG has been the subject of a number of recent research reports. In a report issued on March 9, Cowen analyst Jeff Osborne reiterated a Buy rating on PLUG, with a price target of $1.75, which implies an upside of 35% from current levels. Separately, on February 8, FBR’s Carter Driscoll reiterated a Buy rating on the stock.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Osborne and Carter Driscoll have a yearly average loss of 17.7% and 14.3% respectively. Osborne has a success rate of 38% and is ranked #4458 out of 4557 analysts, while Driscoll has a success rate of 36% and is ranked #4461.

Plug Power, Inc. provides alternative energy technology, which focuses on the design, development, commercialization and manufacture of fuel cell system. It sells and develops fuel cell products to replace lead-acid batteries in material handling vehicles and industrial trucks. The company focuses on proton exchange membrane, or PEM, fuel cell and fuel processing technologies and fuel cell and battery hybrid technologies. Its primary product line is GenDrive, which is a hydrogen fueled PEM fuel cell system that provides power to industrial vehicles.

 

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