Plug Power (NASDAQ:PLUG) stock is acting weird again. Yesterday, shares of the fuel cell pioneer dropped despite news that it was teaming up with Chart Industries and Baker Hughes to form a $1.2 billion “FiveT Hydrogen Fund” to support investments in “clean hydrogen infrastructure projects at scale.”
Today, Plug Power stock is doing the opposite: Rising 4.4% as of 3:40 p.m. EDT on news that an analyst has cut its price target on Plug shares.
Specifically, TheFly.com reports today that analysts at investment bank Piper Sandler have reduced their price target for Plug stock from $48 to $42 a share.
TheFly quotes Piper warning that Plug faces a “challenge” from more established green energy sources such as wind, solar, and rechargeable electric vehicles powered by lithium batteries. The more popular those renewable energy sources become, the less perceived need there may be for yet another green energy source such as hydrogen fuel cells — and the less valuable Plug Power stock will be.
That’s the bad news. Now here’s the good: If Plug and its friends do succeed in convincing industry that fuel cells are an essential component of good green energy policy, the company might achieve its target of producing 500 metric tons per day (TPD) of “green” hydrogen gas for fuel by 2025 — and 1,000 TPD by 2028.
In Piper’s estimation, that could be worth $1 billion in annual revenue — twice today’s levels — for Plug by 2025, and $2 billion by 2028. And despite today’s lowered price target, the analyst thinks that would be enough to justify keeping at least a “neutral” rating on Plug stock, just in case things work out.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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