Is Plug Power A Good Buy After 23% Plunge This Year? Analyst Lists 3 Points That Curb Investor Enthusiasm

Plug Power, Inc. PLUG shares have fallen about 23% year-to-date, grossly underperforming the broader market. The stock could not be out of the woods yet, according to an analyst at KeyBanc Capital Markets.

The Plug Power Analyst: Sophie Karp downgraded Plug Power from Overweight to Sector Weight.

The Plug Power Thesis: Plug Power faces a series of near-term headwinds, Karp said, giving rationale for the downgrade despite the stock showing some attractive valuation from its pullback this year.

The analyst said the recent bank collapses have created a risk-off atmosphere for project financing at a time Plug Power is in a capital-intensive part of its growth cycle.

Aside from the $3 billion in the company's cash hoard, including restricted cash, the company needs external funding to meet its hydrogen production capacity goal of 185-200 tons per day by the year’s end, she said.

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A recent executive departure at the company also introduces risk by way of slowing the pace of activity and new order buildout, the analyst said. Karp noted that Plug Power's GM Electrolyzers quit on April 4 and the position is being filled on an interim basis by Chief Strategy Officer Sanjay Shrestha.

The delays at Plug Power's Georgia plant have cast doubts on the company meeting its full-year hydrogen production targets, Karp said.

"At present, our 2023E revenue is 6% below guidance, but we believe there is downside risk to estimates, as we track the commissioning of the LA and TN expansions," she added.

The analyst said the valuation wasn't relevant at this juncture. "while we maintain that PLUG's vertically integrated approach can create a valuable flywheel effect for the Company, the NT headwinds more than offset this enthusiasm," she said.

Price Action: Plug Power shares ended Monday's session 5.09% higher at $9.50, according to Benzinga Pro data.