Is Wall Street’s opinion of Plug Power (NASDAQ:PLUG) optimistic or pessimistic? There’s an odd divergence between the ambitious consensus price target on PLUG stock and the multitude of downgrades. Still, hopefully, today we can wade through the sea of opinions and come to a conclusion about Plug Power.
Plug Power is probably the most famous publicly listed pure-play fuel cell and green hydrogen company. Investors were hyped up about Plug Power in 2020 and early 2021. However, the enthusiasm has waned considerably since then.
Amid that backdrop, let’s see if we can appeal to the analysts on Wall Street for some clarity and guidance. Then, we can consider a sensible strategy if you’re still thinking about investing in Plug Power.
Wall Street’s Surprisingly High Price Target for PLUG Stock
Reportedly, based on the forecasts of 22 analysts on Wall Street, the consensus price target for PLUG stock is $25.10. Thus, if the current Plug Power share price is around $9, then evidently analysts are bracing for a 179% rally.
This may seem hard to justify, as Plug Power has a track record of quarterly EPS misses and a rapidly dwindling position of cash and cash equivalents. On the other hand, Plug Power is highly optimistic about the company’s future prospects.
How optimistic? Plug Power is targeting annual sales of $5 billion and 30% gross margin for 2026, followed by annual sales of $20 billion and 35% gross margin for 2030. These are ambitious predictions, to say the least. Whether Plug Power actually achieves any of them remains to be seen.
Multiple Analysts Downgrade Plug Power
I’m skeptical of Plug Power’s robust projections, and I have difficulty believing that PLUG stock will reach $25.10 in the next 12 months. Judging by some analysts’ recent downgrades and/or price target cuts, it appears that I’m not the only person who’s doubtful of Plug Power’s near-term prospects.
Per The Fly, here’s a rundown of some not-so-optimistic expert opinions on Plug Power:
- Even though UBS analyst Manav Gupta maintained his “buy” rating on Plug Power shares, he reduced his price target from $26 to $24. Reportedly, UBS analysts warn that Plug Power “remains a ‘show me’ story.” In addition, the analysts feel that Plug Power “must prove to the market that it can hit its revenue growth targets and drive inflection in gross margins.”
- KeyBanc analysts downgraded Plug Power from “overweight” to “sector weight.” Concerned that the company faces a “series of headwinds” in the near term, KeyBanc analysts claim that Plug Power’s “need for external capital creates an overhang in the current environment.”
- Piper Sandler analyst Kashy Harrison kept his “neutral” rating on Plug Power but also slashed his price target the shares from $17 to $12. Going forward, Kashy expects investors to focus on “demand, access to capital, supply-chains, and the Inflation Reduction Act.”
- Moreover, Morgan Stanley analyst Andrew Percoco issued a downgrade of Plug Power from “overweight” to “equal weight.” Percoco also drastically reduced his price target on Plug Power shares, from $35 to $15. Apparently, Morgan Stanley analysts are “getting more cautious” about the “pace of Plug’s revenue growth and margin improvement.” Not only that, but the analysts cite “potential near-term financing risks given the company’s continued elevated levels of cash burn.”
Note that there’s a pattern here. Using phrases like “access to capital,” “need for external capital” and “near-term financing risks,” some analysts are concerned about Plug Power’s fiscal risks. Investors should heed the analysts’ warnings, but ultimately form their own conclusions.
So, Is PLUG Stock a Buy, Sell or Hold?
If you’re concerned about Plug Power’s financial issues, like some analysts are, that’s understandable. At the same time, you might be optimistic about Plug Power if you’re bullish on the green energy movement generally.
All in all, I consider PLUG stock a buy. However, I’m still mindful of Plug Power’s capital risks, as pointed out by some analysts. Therefore, investors can be bullish but also cautious, and consider owning a few shares of Plug Power. That way, you can participate in the potential upside while also limiting your risk.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.