Plug Power Inc PLUG shares were rallying Monday after the struggling alternative energy stock got a major Wall Street upgrade.
The Plug Power Analyst: JPMorgan analyst Paul Coster upgraded Plug from Neutral to Overweight and reiterated a $65 price target.
The Plug Power Thesis: Plug Power is an excellent story stock in a market that is hungry for growth, particularly in the alternative energy space, Coster said in a Monday upgrade note.
Plug shares are down 18% overall in the last month after the company disappointed investors by reporting a net loss of $476.3 million and negative revenue of $316 million in the fourth quarter thanks to a $400-million charge.
Coster said the nascent stage of Plug’s business makes the stock a high-risk investment at this point, but the tremendous long-term upside makes the recent pullback a potential buying opportunity.
“Investors generally seem attendant to the risks associated with this company (particularly a potential rotation from momentum into value), but take the view that PLUG is a leading contender for meaningful share of [the] future Hydrogen economy, in 5 - 10 years,” the analyst said.
Coster said he is anticipating Plug will announce at least one additional “pedestal” customer deal in 2021, in addition to partnerships and joint ventures that will help Plug expand its international footprint.
He is also bullish on the pace of investments in Europe and South Korea and predicted Plug will announce a large stationary deployment with a data center owner sometime in the second quarter.
Coster is now projecting a 2021 adjusted EPS loss of 17 cents on gross billings of $453 million.
PLUG Price Action: Plug Power shares were up 7.73% at $52.12 at last check Monday.
Benzinga’s Take: In a market full of high-growth stocks with staggeringly high valuations, Plug is one of the highest-valued, highest-growth story stocks out there. Following Monday morning’s gains, Plug shares now trade at 70.8 times sales compared to just a 6.2 forward PS ratio for the tech sector as a whole.
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