Share is one of the best ways to play the shift, according to RBC.
Wednesday, analyst Joseph Spak started coverage of Plug Power (ticker: PLUG) with a buy rating and a target price of 42 USD. Plug stock rose 0.4% to $ 34.21 in early trading on Wednesday. Futures on the
Plug Power produces fuel cells that can be operated with hydrogen gas. Hydrogen does not create carbon dioxide, the main gas for climate change, when burned or used in a fuel cell to generate electricity. Plug Power’s core market is forklifts, but the company is looking to expand into other areas, such as heavy haulage, where its fuel cells could be used. Other long-term priorities are the production of electrolyzers and hydrogen production.
Electrolysers can make hydrogen and oxygen gas by passing electricity through water. If the electricity comes from renewable energies such as solar energy, practically no carbon dioxide is produced along the hydrogen value chain.
“Hydrogen is increasingly seen as an important pillar of decarbonization strategies around the world,” wrote Spak in his introductory report. “We believe that with a lot of investment and government support, a hydrogen turnaround can take place for decades.”
This is good news for Plug Power. But the stock already reflects a lot of good news. The company trades for about 18 times Spak’s estimated annual sales. “The market has seen Plug as a proxy for the growth of the hydrogen economy,” said Spak. “But the growth is significant, which justifies the evaluation.”
His price target of $ 42 is based in part on a discounted cash flow model that projects cash flows far into the future, as well as 35 times the Ebitda of $ 537 million he predicts for 2025 negative Ebitda earnings before interest, taxes, depreciation, and amortization – and about $ 85 million in Ebitda in 2022.
Despite its high valuation, Plug remains a popular stock on Wall Street. With the new buy rating, two-thirds or 67% of the analysts who cover the stock rate the stock at Buy. The average The buy-rating ratio for stocks in the S&P 500 is approximately 55%.
The average analyst is around $ 45 per share Course target is slightly higher than Spak’s call of $ 42. With stocks around $ 35, however, both numbers imply ample upside potential for investors.
When the Plug stock went public on Wednesday, it was up less than 1% year-to-date, but the stock was up 973% in 2020.
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