High Risk and Potential Decline: A Sell Rating for Plug Power Stock

Citi analyst Vikram Bagri has maintained their bearish stance on PLUG stock, giving a Sell rating on May 10.

Vikram Bagri has given his Sell rating due to a combination of factors that indicate a high risk associated with Plug Power’s stock. Firstly, despite securing a conditional loan guarantee from the Department of Energy (DOE) for the construction of up to six green hydrogen facilities, there are significant capital expenditures (capex) that the company must fund. Bagri notes that Plug Power has guided for approximately $250 million in capex for the year, and with the next hydrogen plant in Texas expected to cost a minimum of $450 million, the company could be facing considerable financial obligations. The DOE loan may cover a large portion, but Plug Power is still expected to contribute a sizable amount, and the cost of capital through construction could weigh heavily.
Furthermore, the timing of the DOE’s commitment aligns with a broader market rally in heavily shorted stocks, suggesting that the positive reaction may be influenced by market trends rather than company fundamentals. Additionally, there is an expectation that Plug Power will increase its use of its at-the-market (ATM) offering, which could dilute existing shareholders. With these factors in mind, Bagri anticipates a potential share price decline of 30.8%, justifying the Sell rating. The financial requirements, coupled with market conditions and potential shareholder dilution, present a high-risk scenario that underpins the analyst’s bearish outlook on Plug Power’s stock.

In another report released on May 10, Morgan Stanley also maintained a Sell rating on the stock with a $2.50 price target.

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Plug Power (PLUG) Company Description:

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