Plug Power's Margin Improvement 'Is Proving Elusive': Analysts Deep Dive Into Q2 Print

Shares of Plug Power Inc PLUG tanked in early trading on Thursday, even though the company recorded strong second-quarter revenue growth.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Oppenheimer On Plug Power

Analyst Colin Rusch maintained an Outperform rating and price target of $21.

Although Plug Power delivered upbeat revenues for the second quarter, margins were disappointing, Rusch said in a note. “We believe the company is showing better-than-expected manufacturing efficiency and margins, even as fuel and service margins remain lower than consensus,” he added.

The company is likely to “announce a non-dilutive financing in 3Q23 as management works through augmenting its cash position to support capex investments,” the analyst further stated.

RBC Capital Markets On Plug Power

Analyst Chris Dendrinos reiterated an Outperform rating and price target of $12.

Despite the revenue beat, the stock may remain under pressure due to “delays in production facility timing and higher costs,” Dendrinos wrote in a note.

“We believe that the delays in margin improvement are largely transitory and that incremental spend this quarter will translate to improved profitability in the future,” he added.

Check out other analyst stock ratings.

KeyBanc Capital Markets On Plug Power

Analyst Sangita Jain reaffirmed a Sector Weight rating on the stock.

Plug Power’s margin turnaround “is proving elusive, especially as management stopped shy of endorsing the previously provided 4-10% margin guidance for 2023,” Jain said.

“We expect sequential improvement through 2H but it may be 2024 before GM turns positive, in our view,” the analyst wrote. “Financing options are being considered, including a DOE loan that could materialize before YE,” he added.

Morgan Stanley On Plug Power

Analyst Andrew Percoco maintained an Equal-Weight rating and price target of $15.

Continued margin pressure and working capital consumption “drove significant FCF burn,” Percoco stated.

“PLUG reiterated its 2023 revenue target range, but ongoing project delays may continue to serve as near-term impediment to its path to profitability, which will likely result in external funding needs regardless of the DOE loan outcome,” he added.

PLUG Price Action: Shares of Plug Power were down 13.21% to $9.33 at the time of publication Thursday.

Photo: Plug Power