Shares of Plug Power Inc PLUG witnessed a downturn in the premarket session on Wednesday, despite the company’s announcement of launching the largest U.S. green hydrogen plant.
According to BMO Capital Markets, the company faces an “increasingly arduous path” in securing the DOE loan for setting up additional hydrogen plants.
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.
For other analyst stock ratings, refer to the latest updates.
Despite submitting the final term sheet for the approval of the $1.6 billion conditional DOE loan guaranty, and its long-delayed Georgia plant’s commencement of production of liquid hydrogen, there remains uncertainty around the inflow of DOE funding, as indicated by the analyst.
He added, “Furthermore, even with $1.6 billion in DOE funding we are skeptical of value accretion of PLUG’s additional hydrogen plants.”
“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.
Image: Shutterstock
