In a report released yesterday, Ameet Thakkar from BMO Capital maintained a Sell rating on Plug Power (PLUG – Research Report), with a price target of $2.50.
Ameet Thakkar has given his Sell rating due to a combination of factors surrounding Plug Power’s financial stability, operational weaknesses, and uncertain long-term prospects. Despite the removal of going concern language from its 10K, Thakkar remains skeptical about the company’s future. He notes that while the potential $1.6B DOE Loan Guaranty might provide a temporary boost, Plug Power’s ability to generate sustainable positive margins remains doubtful unless there are substantial revisions to the 45V rules. Thakkar also points out that the company’s electrolyzer sales have fallen significantly short of their targets, and there has been a concerning decline in Gendrive volumes, which suggests underlying weaknesses in the business.
Furthermore, Thakkar’s analysis suggests that while Plug Power has managed to alleviate some short-term risks by eliminating going concern language through a $1.3 billion equity ATM program, the company’s long-term outlook remains precarious. The high cash burn rate, with $1.8 billion in FY 2023 and $429 million in the fourth quarter alone, combined with only $300 million in unrestricted cash after recent equity issues, underscores the firm’s precarious liquidity position. Additionally, Thakkar expresses doubts about the company’s plans to reduce cash burn by 70% in 2024, given the necessity to spend on the construction of production hubs, which he believes will continue to challenge the company’s margins even with DOE support.
According to TipRanks, Thakkar is an analyst with an average return of -15.6% and a 33.33% success rate. Thakkar covers the Technology sector, focusing on stocks such as Enphase Energy, First Solar, and SolarEdge Technologies.
In another report released on February 26, Piper Sandler also reiterated a Sell rating on the stock with a $2.80 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.
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