Susquehanna Analyst’s Downgrade
Susquehanna analyst Biju Perincheril downgraded Plug Power, Inc PLUG to Neutral from Positive, lowering the price target to $4.50 from $9.00.
The downgrade was prompted by concerns related to delays in PLUG’s green hydrogen production facility buildout and the challenges in securing external funding sources to finance its growth plans. Consequently, the analyst tempered revenue estimates for FY’24 and FY’25 by 10-15%.
Furthermore, recent Treasury guidance on production tax credits was less advantageous than anticipated and could potentially necessitate PLUG to relocate future production facilities. While recognizing the company’s end-to-end solutions for the hydrogen ecosystem, the analyst opted to await more clarity on the financing front and progress on the gross margin front before reassessing.
Specifically for 4Q’23, the analyst revised the revenue forecast downward, citing that some sales have slipped into ’24.
As a result, the analyst now sees 4Q’23, ’24, and ’25 revenue of $352 million, $1.6 billion, and $2.5 billion, respectively, down from the prior forecast of $427 million, $1.8 billion, and $3.0 billion.
Consequently, ’23/’24/’25 EPS forecasts declined to ($1.53)/($0.71)/($0.16) from ($1.52)/($0.68)/$0.05. Moreover, the analyst lowered EV/EBITDA to 13x from 17x due to continued construction delays and sector headwinds.
Concerns about SunPower Corporation
The analyst also downgraded SunPower Corporation SPWR to Neutral from Positive, lowering the price target to $4.00 from $5.50.
The pessimism towards the stock stems from the slower recovery in California and the company’s relatively higher exposure to the market. With the recent restatement of its financials, SPWR’s disclosed covenant breach on its warehouse facility should be resolved, according to the analyst.
Furthermore, the recent Maxeon settlement could potentially provide additional flexibility. However, SPWR’s relatively weaker financial position disadvantages it compared to peers, resulting in the analyst lowering ’24/’25 customer additions modestly and modeling an ~7% y/y decline this year, below peers Sunrun Inc. (RUN) and Sunnova Energy International Inc. (NOVA).
These adjustments lead to a projected revenue decline of -10 % y/y in 2024 before rebounding to +9% y/y growth in ’25. The 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
