PLUG - Plug Power cut at KeyBanc held down by near-term headwinds

2023-04-18 11:57:29 ET

Plug Power ( NASDAQ: PLUG ) -4.8% in Tuesday's trading as KeyBanc downgraded the stock to Sector Weight from Overweight with a $25 price target, citing "a series of headwinds" in the near term.

The recent bank collapses have created a risk-off atmosphere for project financing, "right when PLUG is in a capital intensive part of its growth cycle" and likely will need external funding to meet its goal of hydrogen production capacity of 185-200 tons/day commissioned by year-end, analyst Sophie Karp said.

Delays at Plug's ( PLUG ) Georgia facility "make us skeptical if full-year targets for hydrogen production can be met," and the recent departure of the head of Electrolyzers with no clear replacement in place "comes at a difficult time." Karp also said.

In the solar sector, Karp expects residential solar-levered names will have a "light" Q1, as poor weather in key markets such as California will hurt deployments, while backlog-driven names such as First Solar ( FSLR ) and Nextracker ( NXT ) that are less dependent on short-term drivers such as weather are not likely to deliver major surprises.

Karp foresees Sunrun ( NASDAQ: RUN ) posting a solid quarter that beats bearish expectations, as the company looks to be taking material market share in California; she upgraded the stock to Overweight from Sector Weight with a $27 PT.

The analyst also believes Enphase Energy ( ENPH ) will deliver a solid Q1 toward the top end of guidance with above-consensus guidance for Q2, while Sunnova ( NOVA ) likely will turn in a weak quarter but reiterate full-year guidance.

Plug Power ( PLUG ) has big aspirations, but "large negative gross margins and a dismal 2022 make it hard to trust the company's future projections," Geoffrey Seiler writes in an analysis published recently on Seeking Alpha .

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