On Thursday, BTIG changed its stance on Plug Power (NASDAQ:PLUG) stock, shifting the rating from Buy to Neutral. The firm's analyst cited a slower than anticipated growth in global hydrogen demand as a key reason for the downgrade.
Despite acknowledging that Plug Power is taking necessary steps to improve its financial position, the analyst pointed out that the company's revenue guidance for 2025 is approximately 20% below the consensus at the midpoint.
Today, Plug Power held its Symposium where it shared its financial targets, revealing a revenue guidance range of $850M-$950M for the year 2025. This update has prompted the analyst to adjust the stock's rating.
Additionally, the company has revised its margin targets, now aiming for positive gross margins by the end of 2025, a shift from the previous goal of the second half of 2024. Positive EBITDA margins are now expected in the second half of 2026.
The analyst noted that while Plug Power's product offerings are well-positioned for the expanding global hydrogen market, the downgrade reflects the need for increased product sales to improve margins, as demand growth is not meeting expectations.
The firm's decision to move to a Neutral rating from Buy is primarily influenced by the timing of demand growth, which is seen as a factor delaying the improvement of margins.
The revision of long-term margin goals by management indicates a more conservative outlook on when the company will achieve profitability. The new targets aim for positive gross margins at the end of 2025 and positive EBITDA margins in the latter half of 2026, suggesting a longer timeline for financial improvement than previously communicated.
In summary, the analyst's comments emphasize that while Plug Power is strategically positioned for the hydrogen industry's expansion, the current pace of demand is not aligning with earlier expectations, leading to the adjustment in the stock's rating.
In other recent news, Plug Power experienced a dip in Q3 revenue, reporting net revenues of $173.7 million, a 13% decrease from the previous year. Despite this, the company showed improved margins with a GAAP gross loss of $100.0 million.
Analyst firm H.C. Wainwright maintained a Buy rating on Plug Power stock, while BMO Capital Markets and Evercore ISI adjusted their financial outlooks, both reducing the stock's price target but maintaining their respective Underperform and Outperform ratings.
In terms of financial moves, Plug Power announced a private placement of an unsecured convertible debenture worth $200 million, expected to convert into up to 125 million shares of the company's common stock. This move is seen as a potential source of additional capital for the company's operations.
Furthermore, Plug Power is expanding its hydrogen production infrastructure, with new facilities in Georgia, Tennessee, and Louisiana expected to be operational by Q1 2025. This expansion is part of the company's strategic positioning in the green hydrogen market.
Evercore ISI projects growth acceleration and margin expansion for Plug Power in the latter half of the decade, driven by expanding end-markets. These are recent developments that investors should note.
InvestingPro Insights
Recent InvestingPro data aligns with BTIG's cautious stance on Plug Power (NASDAQ:PLUG). The company's market cap stands at $1.8 billion, reflecting the market's current valuation amid challenging conditions. Plug Power's revenue for the last twelve months as of Q3 2023 was $659.5 million, with a concerning revenue growth decline of -25.89% over the same period. This decline supports the analyst's concern about slower-than-anticipated growth in global hydrogen demand.
InvestingPro Tips highlight additional challenges facing Plug Power. The company is "quickly burning through cash" and "may have trouble making interest payments on debt," which could explain the revised timeline for achieving positive margins. Moreover, analysts "do not anticipate the company will be profitable this year," aligning with Plug Power's updated projections for positive gross margins by the end of 2025.
These insights provide context to the company's financial struggles and the market's reaction. Investors seeking a more comprehensive analysis can access 13 additional InvestingPro Tips for Plug Power, offering a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.