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Plug Power stock target cut, keeps buy on new 2025 guidance

EditorNatashya Angelica
Published 14/11/2024, 16:26
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On Thursday, B.Riley adjusted its outlook on Plug Power (NASDAQ:PLUG) shares, reducing the price target to $4 from the previous $6 while still holding a Buy rating on the company's stock. The adjustment follows Plug Power's sixth annual Symposium, where the firm presented its 2025 revenue projections, long-term objectives, and various operational updates.

At the event, Plug Power outlined a revenue forecast for 2025 ranging between $850 million and $950 million, which is lower than the analyst's former estimate of $1.18 billion and the consensus of $1.12 billion. The company is also aiming for a full-year gross margin between negative 20% and negative 5%, with plans to reach a positive run-rate by the end of the year.

The management team at Plug Power emphasized their dedication to reducing costs in the Applications business, expanding margins in electrolyzers, and improving fuel margins as the company increases its internal hydrogen production capacity. Despite the slower-than-anticipated development of the hydrogen economy, Plug Power remains confident that its integrated offerings will lead to sustainable and profitable growth in the future.

The company has set ambitious goals, targeting a compound annual growth rate (CAGR) of 30% for its Energy and Applications segments through the end of the decade. By 2030, Plug Power aims to achieve total revenue of $3.75 billion with a gross margin exceeding 30%. Moreover, the firm expects its EBITDA to become positive in the second half of 2026, operating income to follow in 2027, and overall profitability by 2028.

In response to the revised 2025 guidance, B.Riley has updated its estimates, leading to the lowered price target. The analyst's statement concluded with the revised outlook for Plug Power's financial trajectory and the updated valuation of the company's shares.

In other recent news, Plug Power has seen several significant developments. The company reported a year-over-year decrease in Q3 revenue, with net revenues of $173.7 million, a 13% decrease from the previous year. However, the GAAP gross loss for the quarter shrank to $100.0 million, signaling improvement in its margin profile.

Amid concerns about its cash burn, Piper Sandler reduced its price target for Plug Power shares while maintaining an Underweight rating. BTIG also downgraded the company's stock from Buy to Neutral due to slower than expected global hydrogen demand growth.

Plug Power also announced a private placement of an unsecured convertible debenture worth $200 million, expected to convert into up to 125 million shares of the company's common stock. This move may provide additional capital for the company's operations. The company is further expanding its hydrogen production infrastructure, with new facilities in Georgia, Tennessee, and Louisiana expected to be operational by Q1 2025.

Various analyst firms have adjusted their outlooks on Plug Power. BMO Capital Markets and Evercore ISI reduced their price targets for the company's stock, but maintained their respective Underperform and Outperform ratings. H.C. Wainwright, however, maintained a Buy rating on Plug Power shares despite the decline in Q3 revenue. These are recent developments that investors should note.

InvestingPro Insights

Recent data from InvestingPro sheds additional light on Plug Power's financial situation, complementing the insights from the company's Symposium. As of the last twelve months ending Q3 2023, Plug Power reported revenue of $659.5 million, with a concerning revenue growth decline of 25.89%. This aligns with the company's lowered 2025 revenue projections discussed at the Symposium.

InvestingPro Tips highlight that Plug Power is "quickly burning through cash" and "may have trouble making interest payments on debt." These factors likely contribute to the company's revised financial outlook and the focus on cost reduction strategies mentioned in the Symposium.

On a more positive note, InvestingPro Tips indicate that "3 analysts have revised their earnings upwards for the upcoming period," suggesting some optimism despite the challenges. Additionally, "liquid assets exceed short term obligations," which may provide some financial flexibility as the company works towards its long-term goals.

For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Plug Power, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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