Plug Power Analyst Says Loan Commitment De-Risks Hydrogen Stock

Plug Power Inc PLUG shares were climbing on Tuesday, just days after the company reported disappointing first-quarter results.

The company announced a long-awaited loan commitment from the U.S. Department of Energy (DOE), which comes at a time when investors were concerned about the need to secure dilutive financing amid slow margin improvements, according to JPMorgan.

The Plug Power Analyst: Bill Peterson maintained a Neutral rating for Plug Power.

The Plug Power Thesis: The company said it had received a conditional loan commitment of up to $1.66 billion from the DOE's Loan Programs Office to finance as many as six green hydrogen plants, Peterson said in the note.

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If Plug Power is able to successfully satisfy the conditions, the loan could be finalized in the third or fourth quarter, the analyst stated. The loan commitment is a "key de-risking event" that could "help reaccelerate growth if finalized," he added.

There are several near-term catalysts for Plug Power, including the loan approval, project-level funding approval, margin improvements across its segments in the second half of the year, and "final 45V tax credit guidance," Peterson wrote.

“While the stock was up meaningfully pre-market on the de-risking event (we think as investors are covering shorts), we think Neutral PLUG could remain range-bound in the coming months with investors looking for signs of consistent margin improvement for the next several quarters,” the analyst noted.

 PLUG Price Action: Shares of Plug Power had risen by 26.44% to $3.65 at the time of publication on Tuesday.

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Photo: Courtesy Plug Power