The first-quarter report Plug Power Inc PLUG released Tuesday, though triggering a strong upward move in shares, failed to convince an analyst at Canaccord Genuity to retain his bullish bias.
Plug Power Analyst: Jed Dorsheimer downgraded Plug Power shares from Buy to Hold and lowered the price target from $69 to $31.
Plug Power Takeaways: Following its accounting restatements, Plug Power is transitioning to more of an "operational phase," Dorsheimer said in a note.
The company has to demonstrate profitability improvements to justify its healthy valuation, the analyst said.
Reviewing the quarterly results, he said that first-quarter revenues were in line with estimates but the loss was wider than expected. The hydrogen fuel cell manufacturer reiterated its 2021 revenue guidance of $475 million, Dorsheimer said.
The company's costs are trending higher than previously expected as it begins to focus on the execution of multiple projects simultaneously at different stages, the analyst said.
"We expect these to continue and, while this might be offset by gradual GM improvements with increasing volumes, we feel this presents a new risk to the story."
Canaccord lowered its gross margin assumption for 2021 from 17% to 5%.
That said, optimism on the company is supported by new strategic partnerships and sustained interest for a hydrogen economy across Europe, South Korea, and the U.S., Dorsheimer said.
PLUG Price Action: Plug Power shares were down 4.88% at $32.36 at last check Wednesday.
Photo courtesy of Plug Power.
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