Plug Power: Energy Crisis Puts
Green Hydrogen in the Spotlight
The US and its allies are still grappling
with how to deal with Russia following its invasion of Ukraine. Given
the West’s dependence on Russian crude oil and natural gas, Canaccord
analyst Jed Dorsheimer notes that energy has been “weaponized.” “We
are seeing dramatic increases in energy prices,” said the 5-star
analyst, who believes this will also put “pressure on the economics of
green hydrogen.”
That said, as Europe and the US mull over
completely banning the import of Russian energy sources, the
importance of energy independence has become clearer than ever.
“Thus,” notes Dorsheimer, “policy and
subsidy landscapes may shift further to benefit all types of energy
generation, including renewables like green hydrogen.”
But the problem with green hydrogen
production in the first place is the “high energetic cost,” which
makes Dorsheimer skeptical regarding its “viability as a scaled fuel
source.”
And all this in a roundabout way brings
us to Plug Power (PLUG),
a company whose modus operandi is built on the anticipated rise of the
“hydrogen economy.”
In its latest quarterly report, for 4Q21,
the company generated record revenue of $162 million. That’s all well
and good but hasn’t brought it any closer to becoming profitable. In
fact, the net loss per share of ($0.33) was triple the Street’s
forecast of ($0.11).
“The issue for Plug continues to be
whether profitability is achievable,” says Dorsheimer, “or is green
hydrogen yet another Ethanol-based ruse.”
In its bid to generate momentum for green
hydrogen, Plug Power may keep on reiterating or raising revenue, says
the analyst, but the “central question will remain potential
profitability.”
In the meantime, then, Dorsheimer stays
on the sidelines with a Hold rating, while his price target on PLUG
drops from $25 to $21. The implication for investors? Downside of ~19%
from current levels. (To watch Dorsheimer’s track record,
click here)
The Canaccord analyst, however, belongs
to a minority on Wall Street; in fact, his stance is the most bearish.
Two other analysts join Dorsheimer on the fence, but with 10
additional Buys, the stock qualifies with a Strong Buy consensus
rating. Moreover, most analysts think plenty of gains are in store;
going by the $41.15 average target, shares are anticipated to change
hands for a 59% premium a year from now. (See
PLUG stock forecast on TipRanks)
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Disclaimer: The opinions expressed in
this article are solely those of the featured analyst. The content is
intended to be used for informational purposes only. It is very
important to do your own analysis before making any investment.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
Nathan1@greenplayammonia.com
exactrix@exactrix.com
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