Why BTIG Is Bullish On Plug Power, Nikola

Nikola Corporation NKLA and Plug Power Inc. PLUG are two energy stocks that have excited and disappointed investors in equal measure in recent times.

An analyst at BTIG, however, is unequivocally bullish on the two equities. 

The EV Stock Analyst: Analyst Gregory Lewis initiated coverage of both Nikola and Plug Power with Buy ratings.

The analyst has an $18 price target for Nikola shares and a $40 price target for Plug Power shares.

The Nikola Takeaways: Nikola is looking to disrupt the heavy-duty Class 8 truck market with the Nikola Tre battery-electric truck, with the first deliveries targeted by year-end, Lewis said in a note.

The Nikola Two hydrogen fuel cell vehicle is scheduled for a mid-2023 launch, the analyst said. 

The Tre BET will target the urban truck market given its limited range, he said.

The two models of the hydrogen fuelcell electric vehicle, namely Tre and Two, have the ability to disrupt the long-haul truck market, translating to long-term success for the company, Lewis said. 

"We see the Class - 8 truck market as one of the niche transportation markets where hydrogen makes sense," the analyst said. 

Longer-term, Lewis sees the potential for the hydrogen fuel network to be a standalone business outside of the core truck manufacturing business.

"And with the recent LOI with Total Transportation Services (Private) for 100 trucks (30 BETs and 70 FCEVs) another green light in addressing demand for NKLA trucks, the focus is now about execution."

Related Link: Why This Analyst Thinks Plug Power Stock Deserves Elevated Valuation

The Plug Power Takeaways: Plug Power has established itself as a market leader in the nascent global hydrogen market, Lewis said. The company has established a foothold in the material handling industry, with some of the largest global big box companies signed up as customers, the analyst said. 

The company is likely to use its $4 billion in cash to pursue bolt-on acquisitions and joint ventures as it looks to expand the company's scope and product offering as an integrated hydrogen player, Lewis said.

See also: How to Buy Plug Power (PLUG) Stock

With large warehouse deployments being the initial focus, Plug Power has been able to build strong relationships with Amazon, Inc. AMZN and Walmart Inc. WMT, the analyst said. The two customers drove roughly 70% of 2020 revenue, he said. 

Improving costs and an increasing corporate focus on ESG will provide continued growth in the forklift business over the next few years, Lewis said. 

BTIG sees near-term catalysts ahead, including new contract awards and strategic partnerships that expand product offerings.

In the longer-term, increased hydrogen application momentum, improving hydrogen economics, higher carbon prices and government initiatives will likely benefit the company, Lewis said. 

At last check, Nikola shares were slipping 1.55% to $15.25, while Plug Power was advancing 4.01% to $31.13.

Related Link: Plug Power Stock Analyst Says Audit Overhang Lifting: What Investors Need To Know

Photo courtesy of Nikola.