Jthe market did not seem very satisfied Connect the power supply (PLUG) latest company update. Shares fell after the company reiterated its 2022 revenue forecast of $900 million to $925 million.
While investors may have shown their disappointment that the company didn’t raise its guidance, Oppenheimer’s Colin Rusch sees support for the bullish case.
“We believe PLUG’s strategic update is a clear signal of the maturing of the business,” the 5-star analyst said. “With a balance sheet that still shows ~$4.5 billion in cash, a talented management team, material advantage in hands-on experience, and cutting-edge technology, we believe PLUG performs competently against a great opportunity.”
Rusch is particularly pleased with the recent $30 million acquisition of natural gas conversion specialist Joule, which, thanks to savings in electricity costs for operating its hydrogen liquefiers, appears to be paying for itself. It also offers the company the opportunity to generate $250 million in additional long-term revenue.
In fact, as early as 2023, PLUG expects the “electrolyzer capacity pipeline” to outgrow its traditional handling business. While the company has pledged to produce 70 tonnes/day of green hydrogen by the end of the year, internal H2 supply is expected to “drag refueling margins,” which the acquisition de Joule supports more.
Not that PLUG is resting on its laurels when it comes to the core business of material handling. The company continues to grow its core business with a revenue forecast of $600 million for FY22, taking into account three new “pedestal” customers. This figure forms the basis of the 2025 outlook of $1 billion in handling revenue, or a market share of approximately 4.5%.
Like other growth-focused names, the stock has had a rocky start to 2022 – stocks are down 23% so far – but while Rusch admits “the pressure on high-growth names remains in the markets,” the analyst believes that PLUG “continues to de-risk its business while moving toward a sustainable FCF.”
Rusch therefore remains “bullish,” reiterating an outperform (i.e. buy) rating and a price target of $63. At the current valuation, he sees around 195% year-on-year upside for stocks. (To look at Rusch’s prize list, Click here)
What does the rest of the street think? Most tend to agree. On the basis of 12 buys against 3 takes, the stock benefits from a consensual strong buy rating. Based on the average price target of $47.8, the stock will appreciate 107% over the coming year. (See PLUG stock forecast on TipRanks)
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Disclaimer: Opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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