On Wednesday, Citi reiterated its sell rating on Plug Power (NASDAQ:PLUG) stock, maintaining a price target of $1.50. The firm's assessment followed Plug Power's presentation at a competitor's event, where the company discussed financial expectations and operational progress.
The company indicated an anticipated revenue split of one-third in the first half of the year versus two-thirds in the second half, suggesting total revenues may fall short of the previously guided low-end target of $825 million. Instead, Plug Power projects approximately $791 million in total revenue for the year.
In the second half of the year, revenue is expected to increase due to the recognition of more than 70 megawatts of electrolyzers that have already been deployed. Key points from the presentation included an expected sequential expansion in fuel margins in the third quarter, driven by higher utilization and pricing. Additionally, production in the second half is estimated at about 25 tons per day, which is only half of the current customer demand.
Plug Power also reported recognizing approximately $1.3 million from 45V credits and aims for its gross margin to break even in the fourth quarter of 2024. The company's services are projected to reach a breakeven point in 2025. Moreover, definitive documentation for the Department of Energy loan guarantee is anticipated before the end of the year.
The company is releasing restricted cash at a rate of roughly $50 million per quarter and is in the process of arranging for investment tax credit (ITC) credit transfers. During the presentation, there was no mention of the timing for guidance on the 45V credits, nor was there any discussion of potential additional equity needs.
In other recent news, Plug Power has been the recipient of a $10 million grant from the U.S. Department of Energy to demonstrate a new hydrogen refueling station architecture. This is part of a larger $62 million allocation to 20 projects across 15 states to expedite the deployment of clean hydrogen technologies. The hydrogen station, expected to be operational by 2026, will be engineered and constructed by Plug Power and managed from its Vista headquarters in Slingerlands, NY.
The company has also been the subject of a series of adjustments from several analyst firms following its Q2 2024 earnings report. BTIG increased the price target for Plug Power shares, maintaining a Buy rating, while RBC Capital, Canaccord Genuity, and BMO Capital Markets lowered their price targets due to concerns over delays in revenue recognition and an increase in cash burn.
In terms of strategic developments, Plug Power is nearing the completion of 55 megawatts of electrolyzers, expected to generate around $70 million in revenue. The company has also partnered with Olin (NYSE:OLN) Corporation for liquid hydrogen production in Louisiana and is working on obtaining a $1.7 billion loan facility with the Department of Energy.
Plug Power 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. Furthermore, Dean Fullerton, formerly of Amazon (NASDAQ:AMZN), has been appointed as Chief Operating Officer. These are recent developments that highlight the company's ongoing strategic progress.
InvestingPro Insights
As Plug Power (NASDAQ:PLUG) navigates its operational and financial journey, real-time data from InvestingPro provides key insights into the company's current standing. The company's market capitalization stands at approximately $1.65 billion, reflecting its size and investor valuation in the market. Despite an ambitious revenue target, Plug Power's revenue has shown a decrease over the last twelve months, with a reported revenue of $684.49 million and a significant revenue growth decline of -22.2%. This contraction aligns with the company's own projections of falling short of its $825 million target.
InvestingPro Tips reveal that Plug Power operates with a substantial debt burden and may face difficulties in meeting interest payments, which could be a concern for potential investors. The company's cash burn rate is also highlighted, indicating a need for careful financial management moving forward. On a more positive note, Plug Power's liquid assets are reported to exceed its short-term obligations, providing some financial flexibility in the near term. For investors looking for a comprehensive analysis, there are over 13 additional InvestingPro Tips available, which can be explored for deeper insights into Plug Power's financial health and market position.
While Plug Power does not currently offer dividends, it has experienced a significant return over the last week, with a price total return of 8.05%. This volatility is something for traders to watch closely, especially given the company's stock price movements. The InvestingPro Fair Value estimate of $2.94 suggests a potential undervaluation compared to the previous close price of $1.88, which may interest value-seeking investors.
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