scorecard
  1. Home
  2. stock market
  3. news
  4. Plug Power falls 7% after JPMorgan calls the company 'fully-valued,' issues price target below current level

Plug Power falls 7% after JPMorgan calls the company 'fully-valued,' issues price target below current level

Matthew Fox   

Plug Power falls 7% after JPMorgan calls the company 'fully-valued,' issues price target below current level
  • Plug Power fell 7% on Thursday after JPMorgan initiated the hydrogen fuel-cell manufacturer at "neutral" with a $60 price target, representing potential downside of 14% from Wednesdays close.
  • Despite the downside price target, JPMorgan believes Plug Power is a first-mover in what represents a "massive market opportunity" that could be worth $200 billion.
  • Plug Power is "fully-valued but a must own in the hydrogen space," JPMorgan said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Plug Power fell as much as 7% on Thursday after JPMorgan said the hydrogen fuel-cell leader is "fully-valued but a must own in the hydrogen space."

JPMorgan initiated Plug Power at a "neutral" rating with a $60 price target, representing downside potential of 14% from Wednesday's close. The price target is based on a discounted 2024 market cap derived from a 60-times enterprise value-to-2025 EBITDA forecast of $534 million.

Shares of Plug Power have been on a tear in recent months, and year-to-date Plug Power is up 105% as of Wednesday's close.

Plug Power is a first-mover in the hydrogen space, having developed proven proton exchange membrane technology that powers logistic vehicles for first-rate customers like Walmart and Amazon. The company is capitalizing on what could be a $200 billion total addressable market, JPMorgan said.

Plug Power has a strong balance sheet and planned production scale to capitalize on that opportunity, the note said.

Read more: Cathie Wood's ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlooks on the economy, bitcoin, and Tesla.

JPMorgan expects the New York-based company to see a 40% compounded annual growth rate that generates $1.2 billion of gross billings by 2024.

The three big growth opportunities for Plug Power are: 1) expansion of the existing materials-handling franchise, 2) expansion into new markets and verticals including Europe, electric vehicles, and data-center backup power, and 3) green hydrogen, JPMorgan explained.

And a recent partnership between Plug Power and Renault to jointly develop hydrogen-powered electric vehicles could "produce 40% upside to the 2024 revenue target, pushing revenues to $1.7 billion, and cause growth to accelerate in 2025," JPMorgan said.

Revenue in 2025 could exceed $2 billion if Plug Power manages to successfully execute on its growth strategy, JPMorgan said, adding that it thinks this "justifies the very high multiples at which the stock trades."

Read more: BANK OF AMERICA: Buy these 10 Dow stocks to take advantage of rich dividends and a long-term strategy primed for a comeback in 2021

READ MORE ARTICLES ON



Popular Right Now



Advertisement