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Why This Analyst Thinks Plug Power Stock Deserves Elevated Valuation

Why This Analyst Thinks Plug Power Stock Deserves Elevated Valuation

Shares of hydrogen and fuel cell manufacturer Plug Power Inc. (NASDAQ: PLUG) are trading well off the year-to-date high of $75.49 reached in late January.

The Plug Power Analyst: Roth Capital Partners analyst Craig Irwin reiterated a Buy rating and $65 price target on Plug Power shares.

The Plug Power Takeaways: Recent developments point to the  increasing probability of material green hydrogen catalysts, Irwin said in a Wednesday note.

The analyst said he's bracing for a potential green hydrogen offtake agreement from the company in the near-term.

The expectation is premised on the company's application for $520 million in funding from the federal government to support construction of five new green hydrogen facilities, he said. 

See also: How to Buy Plug Power (PLUG) Stock

"We expect Plug mgmt to be working fervently to lock in third party offtake agreements for Green Hydrogen, as this would offer a solid indicator of the true market value for Green Hydrogen and the potential for external sales versus internal consumption." 

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The Green Hydrogen Production Incentives Act being discussed in the Senate, if enacted, will provide a production tax credit for green hydrogen, giving a large possible benefit to Plug Power, Irwin said. Roth's $65 price target for Plug Power shares is based on a 60 times EV multiple on the firm's 2025 EBITDA estimate of $472 million for the company.

"We see the 60x multiple as fair since this result in 2025 should reflect an early stage of growth, where various market forecasts estimate 18% to 23% of world energy from hydrogen by 2050," Irwin said. 

PLUG Price Action: At last check, Plug Power shares were edging up 2.25% to $28.63. 

Latest Ratings for PLUG

Apr 2021Evercore ISI GroupInitiates Coverage OnOutperform
Apr 2021Wells FargoInitiates Coverage OnEqual-Weight
Apr 2021Morgan StanleyDowngradesOverweightEqual-Weight

View More Analyst Ratings for PLUG
View the Latest Analyst Ratings


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