Investors seemed happy enough with the long-delayed earnings report from hydrogen fuel cell technology provider Plug Power, sending the stock up 14% after the results posted Tuesday. Its stock is dropping Wednesday.
Wall Street is generally still high on Plug’s prospects after digesting the report, although the company did lose one bull on Wednesday.
Plug (ticker: PLUG) stock has slipped 3.1% to $32.96 in premarket trading Wednesday. The S&P 500 has risen 0.2%, while the Dow Jones Industrial Average is little changed.
Plug’s first-quarter earnings report was delayed while the company restated prior results because of changes in how it accounts for some customer contracts. The restatements finished in May and the company’s cash was unaffected—something investors watch for when accounting issues arise. What’s more, the total impact on previously reported earnings was very small.
Plug missed per-share earnings estimates, but sales for the growing fuel cell player matter more than earnings at this point. Cowen analyst Jeffrey Osborne called the quarter a solid start to the year. What’s more, the company effectively raised second-quarter sales guidance on their conference call.
Plug Plug management talks in terms of “gross billings.” Reported revenue is typically a little lower than the gross amount. Gross billing guidance for the second quarter is now $115 to $120 million, up from about $105 million previously. Wall Street is projecting $108 million in second-quarter sales, up from $103 million before earnings were reported.
“We view guidance as conservative and see the potentiation for raised guidance at Plug Power’s Symposium in September,” Osborne wrote in a Tuesday report.
Osborne rates shares Buy and has a $41 price target. He raised his price target by $1 on Tuesday.
J.P. Morgan analyst Paul Coster also rates Plug stock Buy. His target price is $51 a share. Like Osborne, Coster is encouraged by the company’s sales outlook. “The CEO noted the company has 100% visibility into the orders necessary to achieve [2021] guidance,” wrote Coster in a Tuesday report. That is better than typical full-year sales visibility during midyear.
Not everyone is as bullish as those two, however. Canaccord Genuity analyst Jed Dorsheimer had, perhaps, the most bearish take after the report. He downgraded shares to Hold from Buy and slashed his price target to $31 a share from $69. He believes the company needs to show profits to justify its valuation. Plug stock is valued at about $19 billion, or about 26 times estimated 2022 sales. Rising costs might be a new impediment to profits, and Wall Street doesn’t project full-year profits until 2024.
Truist analyst Tristan Richardson also rates Plug stock Hold and has a $42 price target. He noted that business execution was solid in the first quarter. Still, he wants the company expand into new markets before becoming more positive on the stock. Plug makes fuel cells to power material handling equipment such as fork lifts. The company has plans to make products for heavy-duty trucking as well as stationary power generation.
Overall, Plug is still a popular stock despite the downgrade, with 65% of analysts covering the stock rating it Buy. The average Buy-rating ratio for stocks in the S&P is about 55%.
Write to Al Root at [email protected]
