Plug Power Inc.

PLUG Details

Plug Power Inc. (NASDAQ: PLUG) is a provider of comprehensive hydrogen fuel cell turnkey solutions.

Q2FY21 Result Performance (For the Quarter Ended 30 June 2021)

• The company has generated net revenue of $124.6 million in Q2FY21 compared to $68 million in Q2FY20. The company shipped 3,666 GenDrive units compared to 2,683 GenDrive units in Q2FY20.

• Its gross margin was negatively impacted by multiple factors that include significant costs associated with the sourcing of the hydrogen molecule, significant costs as the company terminated the fuel vendor relationship as well as transitioned to the new providers, and pandemic-related impact to the global supply chain.

Key Data (Source: Company Reports)

Recent Updates:

• The company, on 20 September 2021, declared that it is expanding the green hydrogen ecosystem to the west coast with the construction of the new state-of-the-art production facility in Fresno County, California. As the largest green hydrogen production facility, the plant would be producing 30 metric tons of the liquid green hydrogen daily, serving customers from San Diego to Vancouver.
• As per the press release dated 14 September 2021, the company announced that it is extending its operations to Europe by setting up a European headquarters in North Rhine-Westphalia in Germany.

Outlook

The company is eyeing to achieve $750 million in gross billings in 2022 as it continues to focus on expanding customer relationships across all the businesses.

Further, it is focusing towards fast-tracking expansion in green hydrogen generation business along with continued expansion through partnerships, joint ventures, and acquisitions in the hydrogen ecosystem.

Besides, it has introduced HYVIA, a joint venture between Renault Group and the company, the first-to-market with turnkey hydrogen mobility solutions aiming 30% market share in hydrogen-powered light commercial vehicles in Europe by 2030.

Key Risks

The company’s products and performance depend primarily on the availability of hydrogen gas. An insufficient supply of hydrogen could unfavourably hurt its sales as well as deployment of the products and services. Fluctuations in the commodity prices as well as product shortages could adversely affect the gross margins.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Stock Recommendation

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and a target price that reflects a rise of low double-digit (in % terms) has been arrived. A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average) considering better current ratio in Q2 FY 2021 as compared to the industry median as well as decent outlook.

Considering the aforementioned factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $24.37 per share, up by 0.21% on 5^th October 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.