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Tuesday, Jefferies analysts made a significant adjustment to Plug Power shares (NASDAQ:PLUG), reducing the price target from $1.70 to $0.90, while keeping a Hold rating on the stock. The stock, which has declined over 75% in the past year and currently trades at $0.79, faces significant challenges ahead. According to InvestingPro data, the company’s overall financial health score is rated as WEAK, with particular concerns about its debt burden and cash burn rate. The firm’s analysis suggests a challenging road ahead for the company, particularly in light of the current US Inflation Reduction Act (IRA) environment.
The revised price target comes as Jefferies estimates Plug Power’s second-quarter revenue at $151 million, which falls short of the consensus estimate of $159 million. Additionally, the firm forecasts a gross margin (GM) of negative 24%, which is notably better than the consensus projection of negative 37%. These projections align with InvestingPro’s data showing a concerning gross profit margin of -77.54% over the last twelve months. Despite these figures, the analyst expressed concerns regarding the company’s financial strategy and liquidity management, though InvestingPro notes that the company’s liquid assets currently exceed its short-term obligations.
For the fiscal year 2025, Jefferies projects Plug Power’s revenue to reach $711 million, compared to the consensus estimate of $732 million. The company’s management has indicated that they do not anticipate needing to access their at-the-market (ATM) offering for fiscal year 2025. However, Jefferies posits that Plug Power might resort to the second tranche of funding from Yorkville in the second half of 2025.
The company is focusing on managing its liquidity and is aiming to achieve breakeven margins by the end of 2025. This goal, according to Jefferies, presents a formidable challenge for Plug Power, especially when considering the broader context of the US IRA, which could impact the company’s performance and financial health.
In other recent news, Plug Power Inc. reported first-quarter 2025 revenue of $133.7 million, which was an 11.1% year-over-year increase but fell short of analyst expectations of $138.41 million. The company also reported adjusted earnings per share of -$0.21, missing estimates by $0.02. Despite these misses, Plug Power highlighted improvements in cash flow and gross margins, with the latter improving from -132% to -55% compared to the same quarter last year. Additionally, Plug Power expanded its hydrogen production capacity to 40 tons per day and saw a 575% year-over-year revenue growth in its electrolyzer business.
Citi maintained its Sell rating on Plug Power stock, with a price target of $0.75, citing challenges such as missed earnings expectations and potential increased costs due to tariffs on Chinese imports. The firm noted a reduction in cash burn by approximately 47% year-over-year. On a positive note, Plug Power secured an order from a significant customer and initiated operations at its Los Angeles plant. CFO Paul Middleton demonstrated confidence in the company’s future by purchasing 350,000 shares of common stock, reflecting his belief in Plug Power’s financial health and growth trajectory.
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