JPMorgan Says Hydrogen Stock Plug Power Trades At 'Steep Price,' Downgrades FuelCell Energy

Hydrogen power company Plug Power Inc PLUG is both a first mover and fast mover in the hydrogen fuel cell space, but the stock trades a "steep price," according to JPMorgan.

The Plug Power Analyst: Paul Coster initiated coverage of Plug Power with a Neutral rating and $60 price target.

The Plug Power Thesis: Plug Power has been an early player in the $200-billion electrification of the transportation and logistics market, Coster said in a Thursday initiation note.

The company is able to back up its year of operation with a proven proton exchange membrane technology, a strong balance sheet, and large customers and partners, the analyst said.

This gives the company a compelling path to make $1.2 billion in sales by 2024 and generate a profit, he said. 

In fact, Plug Power's recent SK Group and Renault partnerships could lift its 2024 sales outlook to $1.7 billion, and revenue growth will continue to accelerate in 2025, Coster said. 

Yet JPMorgan's $60 price target is based on a discounted valuation model of 60 times the EV/2025 EBITDA forecast of $534 million.

"Welcome to hydrogen fuel cell investing," the analyst said. 

Related Link: Why Plug Power's Lead In Fuel Cell, Hydrogen Space Could Create 'Outsized Winner'

Why JPMorgan Is Downgrading FuelCell: Separately, Coster downgraded FuelCell Energy Inc's FCEL stock rating from Neutral to Underweight.

The stock is up 70% since the start of 2021 and more than 800% over the last year. Shares are trading at around 50 times price/forward sales and are "richly valued" compared to peers, the analyst said. 

"At this point we expect the stock to underperform the mean of our coverage over the next 6-12 months, though we remain constructive regarding the Alt Energy sector in general." 

PLUG, FCEL Price Action: Shares of Plug Power lost 4.26% in Thursday's session, closing at $66.54, while FuelCell Energy plunged 8.05% to $17.60. 

Photo courtesy of Plug Power.