It was almost two weeks ago when we first brought up Plug Power (NASDAQ:PLUG), and based on what we had found at the time, there was every reason for analysts to look happy about the stock. Now, we have more analysts getting into the fray and expressing their satisfaction at the notion of owning Plug Power stock.
Investor Day Brings Improved Outlooks On Board
The good news that arrived for Plug Power featured Morgan Stanley upgraded the stock from “equal weight” to “overweight.” The price target took a similar upgrade, as the earlier projections put it at $10.25, but now carry a target of $14.
Morgan Stanley, as expressed by its analyst Stephen Byrd, noted that Plug Power has a “rapid growth potential” connected with it, based on information revealed at the company's investor day functions. With green hydrogen carrying with it a great potential for rapid expansion—Byrd believes that green hydrogen will actually expand as a fuel source a lot faster than investors are really accounting for—including the ability to rapidly supply household power-driven by hydrogen rather than by coal, nuclear power, or even natural gas.
Three days ago, meanwhile, Barclays left its rating at “equal weight,” but also goosed the price target up from its earlier projection of $12 to its new projection of $13. That's still below current levels—the stock is trading at $13.12 as of this writing—but at the time, it actually represented significant upside, if only significant percentage-wise. The stock closed out Friday at $11.65, which makes Barclays' projection surprisingly adroit.
Based on our own research, meanwhile, this brings the company shockingly close to unanimity, with seven “buy” ratings and one “hold” rating, though the consensus price target is still sitting at $10.79, well off today's trading levels.
Cost Cutting, Revenue Raising All on Tap
There are some other developments coming out that make Plug Power look a little more attractive, and one of the biggest is new developments in automation at its upcoming factory. Current estimates suggest that the company will be able to save about 50% on its materials cost thanks to a range of new tools, including laser welders and automated stamping equipment.
The company has clear targets in mind for advancement, and plans to bolster revenue from its current—and impressive enough as it sits—level of $300 million to a staggering $1.2 billion before the ball drops to welcome in 2025.
These might sound like ambitious targets, but reports note that Plug Power has already made the necessary purchases to put the automation in place, and has also been working on new ways to expand the revenue. For instance, just a few days back, the company set up a deal with Apex Clean Energy to help drive use of hydrogen in-home energy production, an agreement that's actually got room for growth built into it. With the global hydrogen economy on track to be worth $2.5 trillion by 2050, establishing a presence early may be just what's needed to get the biggest piece of that market.
Future Projections and Today's Investments
Of course, it's still clear that Plug Power won't have much going for it now, or even in the near-term. This is a company that's starting a movement that may not be fully felt for years or more, and that's not going to be good news for anyone looking for explosive growth today. However, it's quite clear that the company's best days are likely still ahead of it. If it can get any whole-number percentage of that projected hydrogen market, it will still be a multi-billion dollar operation. That's not bad for a company that's asking the price of a medium pizza per share right now.
For those who can hold out for the long term, picking up a block of Plug Power could be a very smart move. The same basic points that backed such a play two weeks ago are still in play, and those points have improved since. Moving away from petrochemicals and hydrocarbons, in general, isn't a bad idea—we've seen as much for electric vehicles, and certainly, home power generation is a welcome move too—and even if only done as a complementary approach, still opens up quite a bit of opportunity down the line.
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