Plug Power Inc. witnessed a significant decline in its shares on Friday, marking its worst day in over nine years. The drop followed another disappointing quarterly report, leading some analysts to suspend their optimistic recommendations until tangible indications of a turnaround in the company, known for developing hydrogen fuel cell systems to replace conventional batteries in electrically powered equipment and vehicles.
RBC Capital analyst Chris Dendrinos expressed in a client note that while management conveyed confidence in executing a liquidity transaction in the near term and anticipated margin improvement through the next year, it was prudent to step aside and await execution of these events and material progress on initiatives to reduce cash burn and enhance margins. Dendrinos downgraded Plug's stock from outperform to sector perform, with the price target reduced from $12 to $5.
In premarket trading, Plug's stock suffered a 37.4% loss, positioning it to open at its lowest price during regular-session hours since April 2020. This downturn was on track to become the worst one-day performance since the 41.5% plunge on March 11, 2014.
The company's third-quarter results, reported late Thursday, showed a wider-than-expected loss and revenue below forecasts, citing "unprecedented supply challenges." This marked the 13th consecutive quarter with losses surpassing Wall Street projections.
Oppenheimer analyst Colin Rusch, previously bullish on Plug for the past three years, downgraded the rating to perform. He acknowledged the company's options for augmenting its balance sheet but noted the compounding effect of hydrogen availability issues on equipment sell-through, which may take a couple of quarters to resolve.
Despite the downgrades and stock performance, a majority of Wall Street analysts remain optimistic. Of the 31 analysts surveyed by FactSet, 17 are bullish, and 14 are neutral. The average price target has fallen to $12.60 from $14.73, implying a significant potential for growth.
Evercore ISI analyst James West, maintaining his outperform rating, sees the green hydrogen economy nearing reality. He anticipates 2024 as an inflection point for Plug, expecting margins to expand significantly as the company scales hydrogen production, lowers production costs, and monetizes renewable energy production tax credits. West reduced his stock price target by 32% but still set it at $25, nearly seven times the stock's premarket trading value on Friday.
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