On Thursday, Jefferies made adjustments to its outlook on Plug Power (NASDAQ:PLUG), a company specializing in alternative energy technology. The firm reduced the stock's price target to $2.00 from the previous $2.20 while maintaining a Hold rating on the shares.
The move by Jefferies reflects concerns about Plug Power's ongoing financial challenges. The company is currently working to reduce its cash burn as it waits for funding from the Department of Energy (DoE). Jefferies pointed out that Plug Power's journey towards a positive gross margin (GM) is not straightforward.
Achieving this financial goal would require the company to meet several key milestones, including adhering to lax 45V guidance, converting their 7.5GW of backlog electrolyzer deployment projects (BEDP) into actual electrolyzer orders, and successfully increasing the production of green hydrogen.
The analyst from Jefferies noted that while further clarity on the 45V guidance could offer some marginal benefit to the company, the primary focus for the near term must be on managing the rate at which it spends cash. This cautionary stance suggests that while there may be potential upsides, the immediate concern is ensuring the company's financial stability.
Plug Power's stock performance and investor sentiment are likely to be influenced by the company's ability to address the issues highlighted by Jefferies. The firm's revised price target and commentary provide a snapshot of the current challenges facing Plug Power as it navigates the complexities of the alternative energy market.
In other recent news, Plug Power has been making significant strides in the hydrogen fuel cell industry. The company has launched a $150 million equipment leasing platform, completed sale and leaseback transactions worth approximately $44 million with GTL Leasing, and secured major electrolyzer orders from a joint venture between energy giants bp and Iberdrola (OTC:IBDRY).
Plug Power has also inked a deal to support the H2DRIVEN project in Portugal, aiming to produce green methanol for heavy industry and mobility applications. On the financial front, Citi has adjusted Plug Power's projected annual revenue to approximately $791 million, with the company expecting its gross margin to break even by the fourth quarter of 2024.
Analyst firms have provided mixed reviews, with BTIG maintaining a Buy rating on Plug Power's stock, while RBC Capital, Canaccord Genuity, and BMO Capital Markets have lowered their price targets. In addition to these developments, Plug Power has received a $10 million grant from the U.S. Department of Energy for a new hydrogen refueling station architecture, and has made key appointments to its leadership team, including Colin Angle, co-founder and former CEO of iRobot (NASDAQ:IRBT), to its Board of Directors, and Dean Fullerton, formerly of Amazon (NASDAQ:AMZN), as Chief Operating Officer.
InvestingPro Insights
The recent analysis from Jefferies aligns with several key metrics and insights from InvestingPro. Plug Power's financial challenges, as highlighted by Jefferies, are reflected in InvestingPro's data. The company's revenue for the last twelve months as of Q2 2023 stood at $684.49 million, with a concerning revenue growth decline of -22.2% over the same period. This decline is even more pronounced in the quarterly figures, with a -44.9% revenue growth in Q2 2023.
InvestingPro Tips further corroborate Jefferies' concerns about Plug Power's cash management. One tip notes that the company is "quickly burning through cash," which directly relates to Jefferies' emphasis on the need for Plug Power to manage its cash burn rate. Another relevant tip indicates that Plug Power "suffers from weak gross profit margins," aligning with Jefferies' observation about the company's challenging path to positive gross margins.
These insights are part of 11 additional tips available on InvestingPro, offering a comprehensive view of Plug Power's financial situation. For investors seeking a deeper understanding of Plug Power's prospects and challenges, exploring the full range of tips and metrics on InvestingPro could provide valuable context to complement analyst reports like the one from Jefferies.
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