Truist holds Plug Power stock with $1.50 target amid new debt deal

Tuesday, Truist Securities maintained a Hold rating on Plug Power shares (NASDAQ:PLUG) with a steady price target of $1.50. Trading at $1.02, the stock sits well above its 52-week low of $0.76 but significantly below its high of $4.90. The decision follows Plug Power’s announcement of preliminary first-quarter results, which showed revenues meeting both Truist’s and Wall Street’s expectations. However, the company’s cash burn of $142 million was slightly higher than the $126 million anticipated by the Street but still better than Truist’s own forecast.

The company’s first-quarter cash burn was affected by delayed payments from a major customer, but this was somewhat offset by guidance for second-quarter revenues that exceeded Truist’s estimates and aligned with Street expectations. Plug Power also recently secured a debt facility, expecting to close an initial $210 million tranche soon. This funding will be used to retire its outstanding Yorkville convertible notes, amounting to approximately $82.5 million, with the possibility of up to $315 million more in future tranches.

The terms of the secured debentures include a 15% annual interest rate, which could increase to 25% per year in case of default. The maturity date for these debentures is set for May 1, 2028, with an option for extension at the discretion of the holder. Notably, Plug Power has indicated that it does not plan any additional equity raises in 2025, thanks to the recent financing and ongoing cost reduction efforts.

Truist Securities acknowledges the progress Plug Power has made in reducing cash burn but believes that further reductions are necessary to bolster investor confidence in the company’s liquidity over the long term, despite the new financing measures. The new debt facility is backed by the company’s restricted cash, which comes at a significant cost. With a current ratio of 1.97 and debt-to-equity ratio of 0.62, InvestingPro analysis reveals 15 additional key insights about the company’s financial health. Get the complete financial picture with InvestingPro’s comprehensive research report, available along with detailed analysis of 1,400+ other US stocks.

In other recent news, Plug Power announced a secured debt facility agreement with Yorkville Advisors, valued at up to $525 million. The initial tranche of $210 million is expected to close by May 2, 2025, and Plug Power plans to use $82.5 million from this tranche to retire a significant portion of its existing convertible debenture, potentially preventing the dilution of 55 million shares. For the first quarter of 2025, Plug Power released preliminary revenue figures ranging from $130 million to $134 million, surpassing some analyst estimates and aligning with the consensus of approximately $132 million. The company also projects second-quarter revenues to be between $140 million and $180 million, which is slightly above some analyst projections but within the consensus estimate.

As of March 31, 2025, Plug Power reported approximately $296 million in unrestricted cash and does not anticipate the need for additional equity fundraising in 2025. Analysts from H.C. Wainwright maintained a Buy rating with a $70 price target, while Wells Fargo (NYSE:WFC) reiterated an Equal Weight rating with a $2 target, and TD Cowen held firm with a Buy rating and a $3 target. These ratings reflect differing perspectives on the company’s financial strategy and growth prospects. Plug Power’s recent operational changes aim for over $200 million in annual cost reductions, contributing to margin improvement and progress toward profitability. The company’s strategic moves, including the new debt facility and operational efficiencies, underscore its commitment to enhancing its financial position and supporting long-term growth.

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