Plug Power Surges 14% on Q1 Earnings Results

Shares of Plug Power (PLUG) witnessed a surge post the company’s reporting of its first quarter results. Shares jumped almost 14% to close at $34.02 on June 22.

Plug Power is an electrical equipment manufacturing company. It develops hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity.

Shares of Plug Power gained around 429% in the past year but lost 5.9% over the past six months. (See Plug Power stock chart on TipRanks)

Q1 Results

Plug Power reported a greater-than-expected loss in the first quarter. It incurred a loss of $0.12 per share in Q1, compared to the $0.08 loss per share estimated by analysts. A loss of $0.12 per share was reported in the same quarter last year.

Revenues surged 76% year-over-year to $72 million. However, it missed the consensus estimate of $76.87 million.

The company shipped 1,308 GenDrive units in Q1, up 58.5% from the year-ago quarter.

Gross billings of $73.7 million increased 71% year-over-year.

The company said that the quarterly results were impacted by the Texas freeze in February, which led to a spike in natural gas prices, causing hydrogen prices to increase. Moreover, high freight costs due to the global COVID-19 impact on the ports and transit providers also impacted margins and profits of the company.

Why the PLUG Share Price Hike Despite Mixed Results?

The enthusiasm among the investors speaks volumes about the company’s strong fundamentals.

With the heightening climate-change concerns, investors are now intrigued by companies that offer green solutions for transportation needs by ensuring zero carbon emissions. Plug Power has gradually emerged as a leader in supporting a hydrogen economy for fueling transportation.

Plug Power is at the forefront of providing green hydrogen solutions via electrolysis. During the earnings call, the company said it is seeing “strong sales traction” in its electrolyzer business. The company expects its partnership with French automaker Renault to help meet the increasing demand of hydrogen solutions in Europe. Apart from this, the company’s partnership with SK Group will help it to expand its presence in Asian markets.

Given the company’s strong product portfolio, including ProGen and GenDrive fuel cell solutions, its efforts to expand and strengthen its global presence through multiple strategic partnerships, and its addition of new “pedestal” customers, the share price is bound to soar higher in the near future.

Analysts’ Views Following Earnings Announcement

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 9 Buys, 4 Holds, 1 Sell. The average PLUG analyst price target of $46.77 implies 37.5% upside potential from the current levels.

Following the Q1 earnings release, Oppenheimer analyst Colin Rusch reiterated the stock’s price target of $62 (82.3% upside potential) and a Buy rating.

Rusch commented, “PLUG continues to make meaningful progress in enabling the hydrogen economy while executing well on its revenue ramp and managing costs effectively despite severe headwinds.”

He further added, “We are encouraged to see the company expand its green hydrogen network while indicating it expects 40–50% of its announced fuel production contracted by year-end with existing applications.”

Another analyst, Evercore ISI analyst James West, reiterated a Buy rating and set a price target of $42 (23.5% upside potential).

West commented, “We’re not concerned with the financials given our long-term view on PLUG and the company expects for hydrogen prices to decline meaningfully going forward. We highlight 38% product gross margins as a positive data point for PLUG’s potential earnings power. Sales traction for PLUG’s electrolyzers were strong and the company is quickly moving ahead with the buildout of its production facilities and PEM gigafactory.”

Furthermore, JPMorgan analyst Paul Coster reiterated a Buy rating on the stock and increased the price target to $51.00 from $47.00. This implies 49.9% upside potential to current levels.

TipRanks Metrics

TipRanks data shows that financial blogger opinions are 57% bullish on PLUG, compared to a sector average of 69%.

PLUG scores a 4 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.

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