One Wall Road analyst thinks Plug Energy’s spectacular run will proceed subsequent yr.
Plug Energy (PLUG 35.16%) inventory is on a roll. Since Could, shares have shot increased in worth by greater than 250%. Whereas some specialists stay bearish, one Wall Road analyst predicts that shares have one other 137% in upside to go over the subsequent 12 months. This is not an outdated prediction, both. This analyst reaffirmed his prediction this week, stressing that Plug Energy has reached an “inflection level” in its hydrogen gasoline cell enterprise.
If you happen to’re monitoring Plug Energy inventory, you may wish to hear what this analyst has to say intimately.
2 causes to be excited for Plug Energy inventory in 2026
Eric Stine, an analyst at Craig-Hallum, a regional funding financial institution, reaffirmed his “purchase” ranking on Plug Energy inventory on Sept. 30. His worth goal of $4 per share is among the many highest of any analyst. Plug Energy’s CFO Paul Middleton and VP of IR Roberto Friedlander met with buyers final week, and Stine apparently appreciated what he heard. In keeping with experiences, this was Middleton’s first roadshow in additional than a decade. He personally bought greater than 1 million shares earlier this yr.
What precisely impressed Stine throughout these conferences? There have been two catalysts. First, Stine was happy to see the corporate pitching itself extra aggressively to analysts and buyers generally. Through the years, hydrogen shares have gone out and in of favor. However with renewed enthusiasm surrounding hydrogen’s potential to fulfill the quickly rising power wants of the synthetic intelligence sector, Stine was blissful to see Plug Energy insert itself extra actively into the dialog. He predicts that Plug Energy’s income progress will speed up by this yr and 2026.
Stine believes this income acceleration can be complemented by streamlined enterprise operations. Plug Energy not too long ago introduced a batch of headcount reductions, with the purpose of reaching optimistic gross margins by the tip of 2025, plus optimistic EBITDA margins by the tip of 2026.
All in all, Stine has an optimistic outlook for Plug Energy, backed by predictions of upper gross sales, decrease prices, and dramatically improved profitability metrics. However earlier than you soar in, you must perceive the angle of extra bearish analysts.
Picture supply: Getty Pictures.
Do not forget that Plug Energy nonetheless faces critical challenges
Whereas Stine is bullish on Plug Energy inventory, many analysts stay bearish. A number of outstanding analysts assume there’s anyplace between 30% to 50% draw back to shares over the subsequent 12 months. That is an enormous distinction in comparison with Stine’s prediction. These analysts are doubtless involved with two main challenges Plug Energy faces. These challenges will stay current not solely over the subsequent yr, however maybe over the subsequent decade and past.
The primary difficulty is just a matter of money move. Plug Energy posted a internet lack of $227 million final quarter. Meaning the corporate misplaced practically 10% of its market cap in simply 90 days. Whereas the corporate is guiding towards optimistic gross margins, buyers ought to keep in mind that it has solely managed to realize this just a few instances in its 25-year working historical past. During the last 12 months, the corporate has generated adverse $600 million in money move from operations. To plug the hole, giant quantities of inventory have been offered, diluting shareholders alongside the best way. Till Plug Energy can show its capability to achieve profitability, buyers ought to deal with administration’s steering with warning.
However there’s extra to this story than poor financials. Plug Energy’s know-how focuses on proton alternate membranes. This know-how is pretty confirmed, however entails extra materials price and might have decrease efficiencies versus applied sciences like strong oxide electrolyzer cells. That know-how is commonly extra environment friendly however can battle at increased temperatures, although latest technological advances could overcome that limitation.
In brief, there’s nonetheless loads of ongoing innovation in terms of which hydrogen applied sciences will see long run adoption. So whereas price cuts will assist Plug Energy transfer towards profitability, it might hamper its capability to take a position into analysis and growth. Some analysts like Stine stay bullish. However I am remaining on the sidelines till Plug Energy proves that its know-how can see elevated demand at affordable gross margins.
Ryan Vanzo has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
