Analyst Cautions On Plug Power And SunPower, Flags Financing Concerns, Slow Recovery

Susquehanna analyst Biju Perincheril downgraded Plug Power, Inc PLUG to Neutral from Positive, lowering the price target to $4.50 from $9.00.

The analyst downgraded the stock owing to to delays related to both PLUG's green hydrogen production facility buildout and securing external funding sources to finance its growth plans. 

Given these delays, the analyst tempered FY'24 and FY'25 revenue estimates by 10-15%. 

Additionally, the recent Treasury guidance on production tax credits was less advantageous than expected and could cause PLUG to shift locations on future production facilities. 

While the analyst applauded the company's end-to-end solutions for the hydrogen ecosystem, moved it to the sidelines until there was more clarity on the financing front and more progress on the gross margin front.

Specifically for 4Q'23, the analyst lowered the revenue forecast, citing that some sales have slipped into '24. 

The analyst now sees 4Q'23, '24, and '25 revenue of $352 million, $1.6 billion, and $2.5 billion from the prior forecast of $427 million, $1.8 billion, and $3.0 billion, respectively. 

As a result, '23/'24/'25 EPS forecast declined to ($1.53)/($0.71)/($0.16) from ($1.52)/($0.68)/$0.05. 

The analyst lowered EV/EBITDA to 13x from 17x due to continued construction delays and sector headwinds.

The analyst downgraded SunPower Corporation SPWR to Neutral from Positive, lowering the price target to $4.00 from $5.50.

The analyst is pessimistic about the stock owing to the slow recovery in California and the company's relatively higher exposure to the market. With the recently completed restating of its financials, SPWR's recently disclosed covenant breach on its warehouse facility should be resolved, and the company should be able to reach a longer-term solution with its term loan/revolver lenders as well, according to the analyst. 

Additionally, the recent Maxeon settlement could provide additional flexibility, the analyst notes. 

That said, SPWR's relatively weaker financial position puts it at a disadvantage compared to peers. 

As a result, the analyst lowered '24/'25 customer additions modestly, modeling an ~7% y/y decline this year, below peers Sunrun Inc. RUN and Sunnova Energy International Inc. NOVA. 

This leads to a revenue decline of -10 % y/y in 2024 before rebounding to +9% y/y growth in '25. 

These changes and updated cost estimates bring the analyst's '24/'25 EBITDA forecasts to $0.2 million/$105.8 million from $46.1 million/$162.4 million.

Price Action: PLUG shares are trading lower by 7.30% to $3.745 on the last check Thursday, while SPWR shares are falling by 8.10% to $3.5750.

Photo via SunPower