Why This Plug Power Analyst Is Turning Bullish For Investor Day?

Plug Power Inc. (NASDAQ: PLUG) received a bullish recommendation from Morgan Stanley ahead of Thursday’s investment event from the hydrogen fuel cell energy company, Plug Symposium 2021.

The Plug Power Analyst: Stephen Byrd raised Plug Power’s stock from Equal-weight to Overweight and raised its price target from $35 to $40.

The thesis: Well positioned: Plug Power is particularly well positioned to be a leader in the hydrogen economy amid the energy transition underway, with the adoption and expansion of the use of green hydrogen, Byrd said in a note.

The company has several strategic partnerships, has $4 billion in cash and cash equivalents on its balance sheet and is poised to benefit from accelerated revenue growth and potential regulatory support, the analyst said.

A very large amount of green hydrogen is needed for the US to meet its decarbonization targets, he said.

“We believe PLUG is one of the best positioned stocks in our coverage to capitalize on future demand for green hydrogen and related technologies given their vertical integration strategy, scale and expertise.”

Recent regulatory support for green hydrogen could add about $9-$10 a share to Morgan Stanley’s price target.

Expecting Plug Power to likely raise its guidance on investor day Thursday, the analyst raised its earnings estimates for the company.

Related link: Why this analyst thinks Plug Power Stock deserves a higher rating?

What to expect from Investor Day: Plug Power is likely to provide a constructive update and share more details about its potential sales pipeline and potential customer announcements related to its electrolysis business, Byrd said.

The company could also announce several off-take agreements as it has begun construction of several of its own hydrogen production facilities, expected to begin production by the end of next year, the analyst said.

Within stationary power, the company is likely to announce a major data center customer, and in terms of material handling, it could officially name its fifth pedestal customer, he said.

Q3 Plug Power Expectations: The third quarter, Byrd said, could be another difficult quarter for Plug Power’s fuel supply business. This is because the hydrogen market has remained extremely tight, in part due to disruptions caused by Hurricane Ida, the analyst said.

Still, this is a passing issue that will be significantly alleviated when the company’s own hydrogen production facilities are online next year, according to Morgan Stanley.

PLUG Price Promotion: Plug Power shares traded 11.5% higher at $33.23.

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