Plug Power 'Plagued' But A Rival Hydrogen OEM Stock Shows Promise: Morgan Stanley

Shares of Plug Power Inc PLUG were trending lower in early trading on Wednesday, after spiking around 28% last week.

Against the backdrop of high interest rates and rising renewable electricity prices, the green hydrogen market has become reliant on subsidies, where there is limited visibility, according to Morgan Stanley.

The Clean Hydrogen Analyst: Arthur Sitbon downgraded the rating for Plug Power from Equal-Weight to Underweight, while reducing the price target from $3.50 to $3.

In the same note, Sitbon reiterated an Overweight rating on Bloom Energy Corp BE, while lowering the price target from $23 to $22.

Check out other analyst stock ratings.

The Clean Hydrogen Thesis: Hydrogen original equipment manufacturers (OEMs) have lost around 40% in 2023 on “higher interest rates, delayed adoption [and] deterioration in hydrogen economics,” Sitbon said in the note.

In 2024, the industry environment is set to remain uncertain, given unfavorable economics, suboptimal visibility on subsidies and slow adoption, the analyst explained.

“With these difficult fundamentals, lower rates and consistent execution are pre-requisites for strong share performance in 2024,” he added.

Plug Power is plagued by “liquidity concerns and worsening hydrogen economics,” while Bloom Energy has “strong underlying demand and profitability of its fuel cell business.”

PLUG, BE Price Action: Shares of Plug Power had declined by 7.31% to $3.93 at the time of publication on Wednesday, while Bloom Energy’s stock was trading higher by 0.54% at $14.99.

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