Why the top and bottom results of Plug Power diverge

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Connect the power supply inc. Stocks (NASDAQ: PLUG) finally lost ground on Friday after the release of the hydrogen fuel cell power company’s second quarter results.

Here’s what sellers have to say.

Plug Power analysts: RBC Capital Markets analyst Joseph Spak maintained an outperformance rating on Plug Power stocks and lowered the price target from $ 42 to $ 35.

Barclays analyst Moses Sutton maintained an underweight rating and a price target of $ 27.

Roth Capital analyst Craig Irwin maintained a buy rating and lowered the price target from $ 55 to $ 45.
Temporary margin pressure, RBC says: Plug Power reported second-quarter gross billing of $ 126 million, up 75% year-on-year, ahead of forecast of $ 115 million, the RBC Spak analyst said.

Despite better-than-expected revenue, the gross margin was negative at $ 40 million, the analyst noted. The weakness was due to margins on fuel, driven by a $ 31 million headwind associated with the change in industrial gas supplier, he said.

The second quarter will likely be the low point for fuel margins given the additional capacity already in line, Spak said. The segment is expected to be on track for a positive gross margin in 2022, the analyst said.

Plug Power raised its gross bill forecast from $ 475 million to $ 500 million and expressed confidence in the previous year’s targets, setting the stage for a potential increase at the symposium on October 14, a. -he declares.

The reduction in the target price, the analyst said, was due to a higher number of shares and a slight impact from a change in how RBC accounts for joint ventures.

Related Link: Why This Plug Power Analyst Is Bullish About The Growth Potential Of Hydrogen Stocks

Barclays cautious on the futures margin profile: The strength of Plug Power’s earnings and revenue guidance is driving the strength of the stocks, analyst Sutton said.

The strength of the company’s MH segment highlights the growing traction of its hydrogen-powered forklifts, the analyst said. Electrolysers are gaining ground, he said.

Management has reported a fifth referral customer, which will contribute $ 25 million in second-half revenue and $ 50 million in revenue on an annualized basis, Sutton said.

“Even amid an increase in MH’s revenues, PLUG’s profitability remains consistently and firmly negative – an uneven position given ambitious plans to expand into new verticals of the hydrogen value chain,” said the analyst.

In these areas, margins are proving more elusive for the long-term economics of the project, he said.

Barclays said it remains cautious about the forward margin profile as Plug Power faces execution risk in existing and developing business units.

“Nonetheless, we reiterate our view that investors should be underweight PLUG – and not actively sell, given that stock performance is clearly tied to one-off stocks.”

2021 A good year for investing, says Roth: Gross margins of 32% were heavily impacted by force majeure supplier closures, termination of a fuel contract and other headwinds related to COVID-19 which resulted in related expenses of over $ 35 million. dollars, said Irwin, an analyst at Roth.

Plug Power management said the supplier transition accounted for two-thirds of the increase in fuel costs in the second quarter, the analyst said.

“Looking at the transient force majeure events, we expect details from the October 14 Corporate Symposium to confirm overall impressive demand from a range of Tier 1 customers who support higher long-term forecasts.” , did he declare.

The year 2021, according to the analyst, is a good year for investing.

Roth said the stock is currently valued at fair value. The company expects the stock to continue trading data points, confirming a longer-term expanding business model.

PLUG Price Action: Plug Power shares ended Friday’s session down 0.38% to $ 25.90.

Related Link: Why BTIG Is Bullish On Electrical Outlet, Nikola

Photo: a Plug Power hydrogen delivery truck.

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