There are a lot of things to like about the progress at Plug Power (PLUG). The hydrogen fuel cell specialist has a growing list of big name customers including Amazon, Home Depot, Walmart and General Motors, with a 5th brand name expected to be added shortly.
Over the past year, the company has also expanded its global reach and now has Joint Ventures (JVs) with South Korean group SK, Renault and Spanish renewable energy producer Acciona.
It’s a big change, says Pearce Hammond of Piper Sandler, who, with the addition of $ 5.1 billion in accessible cash / restricted cash / marketable securities, leaves the company “well capitalized to fund its initiatives. growth ”. As such, Hammond is more “comfortable with the company’s revenue trajectory.”
“Previously, we took a cautious approach to PLUG’s revenue targets,” the analyst added. “But recent quarterly performance has worked well against our model, reinforcing our belief that the company will be able to meet these revenue targets.”
All of this means a change in Hammond’s earnings estimates. The revenue forecast for FY21 is up 4% from $ 468 million to $ 488 million, more than PLUG’s forecast of $ 475 million. Additionally, the FY22 revenue estimate is increased 8% from $ 704 million to $ 762 million, also above the company’s guide for billings of $ 750 million.
That said, higher general and administrative costs are expected due to the hiring of additional staff by PLUG during the recent financial reprocessing venture and Hammond also expects R&D estimates to increase resulting in lower operating margin estimates. The previous forecast had operating margins of -16.5% for FY21, but these have now been changed to -24.3%.
Looking ahead, Hammond still expects operating margins to “go from negative to positive in 2023.”
And while the analyst also believes the company is “better positioned” than Ballard Power Systems – the other hydrogen fuel cell company under its cover – the risk / reward for PLUG is currently “balanced.”
As a result, Hammond reiterated a neutral (i.e. Hold) rating on PLUG stocks as well as a price target of $ 32. The rating may be moderate, but it’s 23% up from current levels. (Watch Hammond’s background, Click here)
The rest of Street’s perspective is positive. Based on 10 buys vs. 4 holds and 1 sell, the stock has a moderate buy consensus rating. The average price target is $ 43.60, which suggests that stocks will appreciate 62% in the coming year. (See the analysis of PLUG actions on TipRanks)
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