Morgan Stanley analyst Stephen Byrd just ratcheted up his price target on Plug Power stock. He needed to if he wanted to keep his bullish rating. Shares of Plug Power, which primarily makes forklifts powered by hydrogen fuel cells, have already soared this year.
Byrd raised his price target for Plug Power (ticker: PLUG) by 162% to $38 on Monday. His new target is more than 15% above where shares were trading Monday afternoon. He upgraded the stock to the equivalent of Buy from Hold in September, when shares were trading for less than $14 each.
It turned out to be a good call. Shares are up more than 130% over the past three months, and about 900% year to date.
Looking ahead, Byrd sees more growth for the company. About $3 trillion of “market size is possible over time with the expansion of hydrogen use in multiple areas of the economy,” he wrote in a Monday research report. He also believes Plug’s history with hydrogen-fuel-cell-powered forklifts—the company’s primary products—give it an advantage over newer fuel-cell players.
Investors have become more excited about the potential for hydrogen-based technologies, as Plug’s stock-price performance might imply. Nikola (NKLA) fueled investor interest in hydrogen when it became a publicly traded entity in June. The company plans to launch a hydrogen-powered 18-wheeler truck in coming years. And investors also expect green technologies to get a boost from the incoming Biden administration.
Investors appear to be betting on Plug Power and not on Nikola after the latter company’s roller-coaster year. Plug Power’s market capitalization is almost $14 billion. Nikola’s has slid to less than $7 billion.
Hydrogen-based technologies emit no greenhouse gases when burned or used in a fuel cell. And while hydrogen-gas production can emit greenhouse gases—most hydrogen gas comes from natural gas—the gas can also be produced from renewable electricity and water.
All of that clean-energy potential has made Plug Power a Wall Street darling. Eleven out of 12 analysts—or 92%—covering the stock rate shares at Buy. The average Buy-rating ratio for stocks in the Dow Jones Industrial Average is about 58%.
But recent gains have left shares trading above the average analyst price target of about $28. Byrd’s target is now the highest on the Street among large brokers.
Byrd also on Monday boosted his price target for Bloom Energy (BE), which he rates Buy. His new price target is $32, up from $21, after Bloom shares gained 50% in a month. Bloom, for the most part, makes fuel cells for stationary power generators, and has a market cap of about $4.4 billion.
That smaller market cap might be why Bloom’s stock got a bigger bump from Byrd’s bullish call on Monday. Bloom shares rose 3.6% in Monday afternoon trading, while Plug stock is up 1.2%. The S&P 500 and Dow, for comparison, are down 0.3% and up 0.3%, respectively.
Byrd does acknowledge risks to his bullish view, mainly the possibility that slower development of the hydrogen industry could lead to slower growth for both companies. That is why his best- and worst-case scenario prices for both stocks are very wide.
In the best case, Byrd sees Plug going to $73 a share, but his worst case for the stock is $12. For Bloom Energy shares, his best-case price is $61, compared with a worst-case target price of just $1.50.
Write to Al Root at [email protected]