JPMorgan Says Hydrogen Stock Plug Power Trades At 'Steep Price,' Downgrades FuelCell Energy
Hydrogen power company Plug Power Inc (NASDAQ: PLUG) is both a first mover and fast mover in the hydrogen fuel cell space, but the stock trades a "steep price," according to JPMorgan.
The Plug Power Analyst: Paul Coster initiated coverage of Plug Power with a Neutral rating and $60 price target.
The Plug Power Thesis: Plug Power has been an early player in the $200-billion electrification of the transportation and logistics market, Coster said in a Thursday initiation note.
The company is able to back up its year of operation with a proven proton exchange membrane technology, a strong balance sheet, and large customers and partners, the analyst said.
This gives the company a compelling path to make $1.2 billion in sales by 2024 and generate a profit, he said.
In fact, Plug Power's recent SK Group and Renault partnerships could lift its 2024 sales outlook to $1.7 billion, and revenue growth will continue to accelerate in 2025, Coster said.
Yet JPMorgan's $60 price target is based on a discounted valuation model of 60 times the EV/2025 EBITDA forecast of $534 million.
"Welcome to hydrogen fuel cell investing," the analyst said.
Related Link: Why Plug Power's Lead In Fuel Cell, Hydrogen Space Could Create 'Outsized Winner'
Why JPMorgan Is Downgrading FuelCell: Separately, Coster downgraded FuelCell Energy Inc's (NASDAQ: FCEL) stock rating from Neutral to Underweight.
The stock is up 70% since the start of 2021 and more than 800% over the last year. Shares are trading at around 50 times price/forward sales and are "richly valued" compared to peers, the analyst said.
"At this point we expect the stock to underperform the mean of our coverage over the next 6-12 months, though we remain constructive regarding the Alt Energy sector in general."
PLUG, FCEL Price Action: Shares of Plug Power lost 4.26% in Thursday's session, closing at $66.54, while FuelCell Energy plunged 8.05% to $17.60.
Photo courtesy of Plug Power.
Latest Ratings for FCEL
Jan 2021 | JP Morgan | Downgrades | Neutral | Underweight |
Jan 2021 | Jefferies | Initiates Coverage On | Hold | |
Dec 2020 | Canaccord Genuity | Initiates Coverage On | Hold |
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