Plug Energy (PLUG) is a pioneer in hydrogen gas cells — various “engines” that use hydrogen gasoline to create electrical energy to energy an electrical automotive, with water being the one byproduct.
Plug Energy can be a rising drive in hydrogen gasoline manufacturing, asserting in June 2020 that it had acquired two smaller firms specializing in manufacturing of the gasoline. Quickly, Plug will be capable to produce not simply engines that use hydrogen as their gas — however the gas itself.
With Plug Energy making strikes to seize your complete hydrogen worth chain, the corporate has promised traders that simply three brief years from now, Plug might be knocking down annual revenues of $1.25 billion, and changing $200 million of that into working revenue.
However now, even these might change into conservative estimates.
On Wednesday after the market closed, Plug Energy introduced an alliance with South Korean industrial large SK Group. Below the phrases of this deal, which is anticipated to shut earlier than the top of this quarter, Plug will challenge, and SK will purchase for $29.29 every, roughly 51.4 million new Plug shares. SK’s funding within the gas cell firm will subsequently quantity to a cool $1.5 billion, and in trade, SK will obtain a 9.9% possession stake in Plug. Collectively, the businesses will then proceed to “present hydrogen gas cell techniques, hydrogen fueling stations, and electrolyzers to the Korean and broader Asian markets.”
Moreover, Plug and SK will create a South Korean three way partnership “to assist the quickly rising Asian Market.” As the businesses famous of their press launch, South Korea’s authorities has established a “Hydrogen Economic system Roadmap by means of 2040” aiming to place six million gas cell automobiles on native roads, set up 1,200 refilling stations to gas the vehicles, and produce greater than 5 million tons of hydrogen yearly to fill the filling stations. In whole, the nation hopes to create a $40 billion “hydrogen economic system” by 2040.
Traders responded to the information with enthusiasm, bidding up PLUG shares by 28%, as of this writing.
Certainly, all the above is fairly thrilling information, and over at funding financial institution Oppenheimer, analyst Colin Rusch is kind of enthusiastic about it.
The 5-star analyst believes the $1.5 billion funding by and partnership with SK Group will assist to spice up Plug Energy’s revenues by a further $500 million by 2024. Added to the $1.25 billion Plug was already promising earlier than this deal was introduced, that’s a 40% improve over earlier projections. What’s extra, traders could not want to attend till 2024 to being taking advantage of this information, as a result of Plug will launch up to date monetary targets as early as January 21, when the corporate is anticipated to offer a brand new company replace addressing the SK deal.
So what’s the draw back, if there may be any? Effectively, there’s the tiny element that, irrespective of how a lot hydrogen it produced nor what number of gas cells it manufactured, Plug Energy has by no means as soon as in its 24-year-long historical past really earned a revenue. It didn’t promise to earn any earnings from this newest deal, both, nor did Rusch predict any.
General, Rusch stays with the bulls, ranking PLUG an Outperform (i.e. Purchase). (To observe Rusch’s monitor file, click here)
Turning now to the remainder of the Road, traders are offered with a conundrum. On the one hand, primarily based on 9 Buys, the inventory has a unanimous Robust Purchase consensus ranking. Nevertheless, the analysts anticipate shares to tumble 22% as indicated by the $36.11 common worth goal. That is almost certainly a results of immediately’s fast surge and analysts’ incapacity to turnaround new worth targets so shortly. (See PLUG stock analysis on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is rather essential to do your personal evaluation earlier than making any funding.