Plug Power To Get A Big Boost From Inflation Reduction Act And $40B+ Microsoft Opportunity, Say Bullish Analysts

Zinger Key Points
  • Analysts highlight the opportunity for Plug Power after the Inflation Reduction Act.
  • A validation test for backup power with Microsoft could create a new opportunity.

Analysts are sizing up the second quarter financial results from Plug Power Inc PLUG and the opportunity the company could have from the Inflation Reduction Act and a production tax credit.

The Plug Power Analysts: BMO analyst Ameet Thakkar has a Market Perform rating and raises the price target from $20 to $29.

RBC analyst Joseph Spak has an Outperform rating and raises the price target from $18 to $29.

H.C. Wainwright analyst Amit Dayal has a Buy rating and a price target of $78.

Related Link: This Plug Power Analyst Hikes Price Target For Stock Following Q2 Results, Here's Why

The Analyst Takeaways: Thakkar said the second quarter earnings report saw the actual quarterly results take a back seat to discussion of what’s next and the impact of the Inflation Reduction Act.

“Greater clarity on how much of this upside flows to gross margins and operating income is what matters from here,” Thakkar said.

The analyst said Plug Power could be one of the biggest beneficiaries of the new legislation, leading to a price target increase.

“Plug may pass on some cost savings benefit to customers to drive greater adoption of hydrogen. This remains a key part of quantifying the upside of legislation in our view.”

The analyst assumes $5 in incremental value for Plug’s current hydrogen production forecast for the next 10 years.

Meanwhile, higher forecasted sales potential led to a price increase from Spak. The analyst points to the hydrogen production tax credit in the Inflation Reduction Act as being “very impactful” for Plug.

“The impact could be much larger as it’s a catalyst to accelerate growth of the green hydrogen industry and could positively impact growth of PLUG’s product lines including electrolyzers and fuel cells.”

The analyst notes that Plug Power’s move to transition to being a “turnkey” player in the hydrogen market gets a “large boost.”

Spak said the new opportunities for Plug put earnings metrics forward by one to two years in forecasted models.


The passage of the Inflation Reduction Act is also highlighted by Dayal.

“We believe the PTC also makes green hydrogen economical compared to grey hydrogen in several markets, including industries like steel production,” Dayal said.

The analyst highlights a power demo unit it validated in July for Microsoft Corporation MSFT.

“We believe that this application could compete in markets currently using diesel powered back-up power, opening up a potential $40B-plus addressable market for Plug.”

The analyst thinks Plug shares will get a “better appreciation from the market” with margin improvement and global growth opportunities.

PLUG Price Action: Plug shares are up 17% to $28.78 on Wednesday.

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Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsTrading IdeasAmeet ThakkarAmit DayalBMOH.C. Wainwrighthydrogen powerhydrogen stocksInflation Reduction ActJoseph SpakRBC
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