Why Inflation Reduction Act Is A 'Growth Catalyst' For Plug Power In More Ways Than One: Analyst Weighs In

Plug Power, Inc. PLUG shares are pulling back early Wednesday after the hydrogen fuel-energy company reported a second-quarter revenue miss. An analyst at KeyBanc Capital Markets, however, deemed it fit to upwardly revise the price target for the shares.

The Plug Power Analyst: Sangita Jain maintained an Overweight rating and increased the price target for the shares from $30 to $32.

The Plug Power Thesis: The “Inflation Reduction Act of 2022" benefits the company by not only granting a hydrogen production tax credit but also a five-year direct pay provision for hydrogen manufacturing facilities, Jain said in the note. This will be a "meaningful advantage" in financing growth in the early period, she added.

The analyst noted that Europe has led the way in backlog bookings this year, with the company exceeding its 1-Gigawatt backlog target. Plug Power’s management reiterated its strategy of growth in Europe through new and existing joint ventures, she said. The company mentioned a $15 billion “funnel” of opportunities, she added.

Read Benzinga's technical analysis of Plug Power's stock

If the stationary power demo with Microsoft Corporation MSFT is successful, it could open a new growth avenue, Jain said.

“The recent 3 MW trial of a fuel cell system to be used as backup power could become the template to eliminate diesel-powered backup generators across critical applications including data centers,” the analyst said.

"The energy and climate provisions in the bill will provide longstanding tailwinds to the clean hydrogen industry, and PLUG with its established positioning in electrolyzers and hydrogen generation stands to benefit," Jain added.

Plug Power Price Action: In premarket trading on Wednesday, Plug Power shares were slipping 2.63% to $24.02, according to Benzinga Pro data.