The hydrogen economy is gaining steam. And two aspiring hydrogen giants, Nikola and Plug Power, both updated investors Thursday, reporting fourth-quarter numbers. Results for both were surprising, but in different ways. Now Wall Street is weighing in on what to make of it all.
Plug Power (ticker: PLUG) power, for its part, reported negative sales. That’s unusual and analyst were projecting positive sales. The negative number had to do with accounting and warrants issued to customers in connection with equipment purchases. The warrants were disclosed long ago. Still, shares dropped almost 14% Thursday.
Wall Street, however, isn’t all that worried about negative sales. “2024 targets were reinforced on the call. Near term, our sales estimates are largely unchanged,” wrote Truist analyst Tristan Richardson in a Thursday report. However, “Plug is not immune to this market sentiment.” Higher-growth stocks have fallen as inflation fears have risen in recent days. A lot of future growth is built into Plug’s valuation. Shares trade at about 30 times estimated 2022 sales. Richardson still rates shares Buy, but he cut his target price to $65 from $80.
Cowen analyst Jeffery Osborne also rates Plug stock at Buy. His target was unchanged Thursday at $75 a share. “Guidance was maintained for revenue and gross billings,” wrote Osborne. He, like Richardson, doesn’t see any fundamental change after the odd fourth-quarter results.
Nikola (NKLA) reported numbers after the market closed. Its quarter was unusual in another way. There was a lack of drama. After a tumultuous 2020 which say the founder leave the company and customers canceled orders, investors cheered the relative calm. Still, shares are down 2% in premarket trading, but that’s in the context of a near-30% year-to-date gain. What’s more, shares are up about 90% from their $10.34 52-week low.
Osborne rates Nikola stock at Buy and has a $47 price target. He wrote Nikola continues to make progress on its path to delivering trucks in 2021, but noted the company plans to deliver fewer trucks in the fourth quarter than he expected. Still, Osborne remains bullish: “we see the stock working in the Spring, driven by order announcements as potential fleet customers can get their hands on certified Tre [battery electric] vehicles.”
The Nikola battery-powered Tre is the company’s first model slated for shipment. It’s a heavy-duty truck powered by batteries for short- and medium-haul applications.
The fourth quarter Tre deliveries were consistent with J.P. Morgan analyst Paul Coster’s expectations. He wrote that Nikola’s report was “uneventful.” Coster also rates Nikola stock at Buy, but trimmed his price target to $33 price target from $35.
The Street, overall, appears to be fine with Nikola numbers. “While there were some clear puts and takes, overall we would characterize last night as a positive step in the right direction after navigating a Category 5 storm post the short report/[founder] departure,” wrote Wedbush analyst Dan Ives in a Friday report. Ives downgraded Nikola stock to Sell shortly after a short seller published a negative research report. The company denies the claims in that report. But months later he upgraded shares to Hold. He still rates Nikola stock at Hold and has a $25 price target.
The hydrogen economy, based on those two reports, is on track. Hydrogen is capturing investors’ imaginations because it doesn’t emit any of the greenhouse gasses blamed for global warming when burned or when used to generate electricity in fuel cells.
Despite Thursday’s drop, Plug stock is still up about 800% over the past year. Shares are up 4.6% in Friday morning trading. The S&P 500, for comparison, is down 0.23%, while the Dow Jones Industrial Average is down 0.74%.
Write to Al Root at [email protected]
