A person refuels a Plug Power GenDrive fuel cell with GenFuel hydrogen.
Courtesy Plug Power
Shares of Plug Power were electrolyzed on Wednesday, when the stock received a Positive rating from Susquehanna Financial Group.
“Our Positive rating largely reflects Plug’s top-line growth potential as the green hydrogen ecosystem develops over the next several years, allowing for the stock’s relatively rich valuation,” wrote analyst Biju Perincheri in a research note.
Perincheril initiated coverage of the stock on Wednesday with a $26 price target. Susquehanna expects stocks that are rated Positive will appreciate by at least 15% over the next 12 months.
While Perincheril has a cautious view of the hydrogen market, the analyst believes Plug’s ability to provide vertically integrated end-to-end solutions puts it in a favorable position to grow over the next decade.
Plug Power has worked to launch an electrolyzer business, build out a green hydrogen production and delivery network, and has expanded its fuel cell business to multiple key markets, Perincheril said. By 2025, management expects gross billings to jump by sixfold to around $3 billion. About 60% of that growth could come from new business lines in electrolyzer sales and green hydrogen production. Perincheril’s revenue estimate for 2025 is slightly lower than guidance at $2.75 billion, but that still points to strong upside for the company.
Hydrogen gas is a potentially sustainable solution for the world’s energy needs, but continues to be more expensive than other alternatives. Those costs could decrease as the technology matures. In the meantime, Plug has powered with key industry partners, including Renault ( FR:RNO), BAE Systems UK:BA, and Airbus ( FR:AIR), around the globe to start implementing hydrogen-fueled solutions.
Plug’s stock could be further catalyzed if green hydrogen tax credits pass on a standalone basis, which is looking likely even though the Democrats’ Build Back Better plan failed to pass.
Plug Power stock was up 5.5% to $20.82 on Wednesday.
Write to Sabrina Escobar at [email protected]
