Plug Power's Outlook Dims, Analyst Downgrades Stock On Hydrogen Policy Risks And Limited Capacity Growth

Plug Power Inc. PLUG shares are trading lower on Monday. Seaport Global analyst Tom Curran downgraded the rating from Neutral to Sell and announced a price forecast of $1.

In the September update on the clean hydrogen sector, the analyst flagged two issues: low post-FID activity and overall pipeline skewed excessively towards supply.

Since then, news from North America and Europe, PLUG’s two main markets and accounts for 93% of 2024 revenue, has been negative, says the analyst.

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In particular, in the U.S., President Trump’s “Unleashing American Energy” executive order has prompted a 90-day review of the DOE’s H2Hubs program, leaving much of the $8 billion in grants unallocated and putting funding at risk, writes the analyst.

Moreover, Curran says that Agency for the Cooperation of Energy Regulators (ACER) warned the EU may miss its 2030 strategic goal of 20Mt of renewable H2 consumption and projects face risks from uncertainties of future H2 demand and increased costs.

Additionally, Germany’s Vice Chancellor abandoned the Power Plant Security Act, after the coalition collapse, which might have backed the construction of 12.5GW of mainly H2-ready gas-fired plants, adds the analyst.

The analyst says that, on the energy front, PLUG’s North American hydrogen generation capacity will remain limited to 40TPD until Texas comes online in the second half of 2026, resulting in the company continuing to source an additional 25TPD externally.

In applications, PLUG appears to be narrowing its focus to material handling and stationary power, with plans to end its HYVIA joint venture.

Consequently, Curran lowered the estimates, now forecasting 2023A-26E top line CAGR of just 7%, with negative gross margins until the second quarter of 2026.

Today, the company disclosed that it enhanced its liquidity by approximately $30 million on January 24, 2025, by transferring the Federal Investment Tax Credit (ITC) to a major investor with a proven history of acquiring similar credits.

This ITC transfer marks Plug’s first use of the transferability provisions under the Inflation Reduction Act (IRA) of 2022 and is one of the first transactions involving hydrogen storage and liquefaction assets.

Investors can gain exposure to the stock via Global X Hydrogen ETF HYDR and ETF Series Solutions Defiance Next Gen H2 ETF HDRO.

Price Action: PLUG shares are down 7.21% at $1.93 at the last check Monday.

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