Jefferies analyst Dushyant Ailani reiterated a Hold rating on Plug Power (PLUG – Research Report) today and set a price target of $4.00.
Dushyant Ailani’s rating is based on a thorough evaluation of Plug Power’s financials and market position, as well as the company’s recent performance and future prospects. Ailani acknowledges the company’s potential to benefit from anticipated Department of Energy (DOE) funding and its efforts to reduce cash burn. However, he also notes the challenges faced by Plug Power, such as the capital-intensive nature of building green hydrogen infrastructure, which is likely to keep cash generation limited in the near term. Although the company has made progress by issuing shares to raise funds, and management has suggested positive gross margins for the electrolyzer business by the second half of 2024, Ailani remains cautious due to the ongoing cash burn expected until at least 2028, with operational FCF positivity projected only in 2025.
The Hold rating is further substantiated by the mixed results from the fourth quarter, where despite higher sales, Plug Power experienced a significant gross margin miss and took a considerable charge for obsolete inventory. While Ailani points out that the market overlooked these shortcomings, the underlying financial strain, evidenced by a higher-than-anticipated organic cash burn and a lower liquidity position than expected, underscores the challenges ahead. Given these factors, Ailani maintains a Hold rating with a price target of $4, applying a 15x EV/EBITDA multiple to the estimated 2026 EBITDA and discounting it back at a 12% cost of equity. This cautious stance reflects the balance between the potential long-term opportunities and the immediate financial uncertainties facing Plug Power.
See Insiders’ Hot Stocks on TipRanks >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
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.
Read More on PLUG:
- PLUG Earnings: Plug Power Fizzles after Shaky Earnings Results
- Plug Power Inc Reported Earnings. Did it Beat Estimates?
- Plug Power Issues Key Financial Information Update
- Plug Highlights Year of Strategic Growth and Advancements in Accelerating the Green Hydrogen Economy
- Options Volatility and Implied Earnings Moves Today, March 01, 2024
