Plug Power Analyst Turns Bearish: 'Even With $1.6 Billion In Funding We Are Skeptical'

Shares of Plug Power Inc PLUG tanked in the premarket session on Wednesday, despite news of the company launching the largest U.S. green hydrogen plant.

The company has an “increasingly arduous path” ahead in securing the DOE loan for setting up additional hydrogen plants, according to BMO Capital Markets.

The Plug Power Analyst: Ameet Thakkar downgraded the rating for Plug Power from Market Perform to Underperform, while reducing the price target from $3.50 to $2.50.

The Plug Power Thesis: The company’s annual update call sparked a 31% rally in the stock, Thakkar said in the downgrade note.

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Although Plug Power has submitted the final term sheet for approval of the $1.6 billion conditional DOE loan guaranty and its long-delayed Georgia plant had begun production of liquid hydrogen, there is uncertainty around whether and when the DOE funding will flow in, the analyst stated.

“Furthermore, even with $1.6 billion in DOE funding we are skeptical of value accretion of PLUG’s additional hydrogen plants,” he added.

“Even if PLUG manages to thread the needle to DOE funding in 3Q 2024, we worry that 45V uncertainty implies worse-than-estimated margins on H2 production, and DOE requirements such as credit subsidy cost and potential amortization are factors that imply more downside to our LT estimates,” Thakkar further wrote.

PLUG Price Action: Shares of Plug Power had declined by 1.61% to $3.66 in premarket trading on Wednesday.

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