Hydrogen fuel cell stocks have been very volatile in 2021. Plug Power (PLUG) stock is down 19 percent YTD and trades at only about one-third of its 52-week highs. PLUG stock was trading higher in premarket on Aug. 6 as markets approved its earnings release. What’s the forecast for PLUG stock and how high can the fuel cell company go in 2021?
Earlier this year, PLUG identified an accounting error and in consultation with KPMG, it reinstated the earnings. These were largely related to non-cash charges. Plug Power has a dubious distinction of posting negative revenues. It posted negative revenues last year. Royal Caribbean also posted negative revenues in the third quarter of 2020. PLUG stock fell after the news. While the stock recovered somewhat, it continues to trade near its 2021 lows.
Plug Power's Q2 2021 earnings
Plug Power released its earnings for the second quarter of 2021 on Aug. 5 after the markets closed. The company reported net revenues of $124.6 million in the quarter, which were 83 percent higher than the same quarter in 2020. The revenues were ahead of analysts' expectations.
Meanwhile, the company’s bottom line was worse than expected and it posted an operating loss of $89.6 million in the quarter compared to $26.5 million in the second quarter of 2020. There were a lot of one-time expenses in the quarter including costs related to the reinstatement of accounts.
The company also incurred higher costs due to higher hydrogen sourcing costs amid force majeure. The company also terminated the relationship with a fuel vendor and shifted to new providers, which led to higher costs. It incurred a large cost for shifting to new providers but sees it leading to better cost dynamics in the future as it says that the current vendor "escalated prices egregiously."
Plug Power stock forecast
Wall Street analysts see better days ahead for Plug Power stock and the forecasted median target price of $42 is a 61.5 percent premium over the current prices. Among the 23 analysts polled by CNN Business, 15 rate PLUG stock as a buy, while seven rate it as a hold. One analyst has a sell or equivalent rating for the fuel cell company.
PLUG looks like a good stock to buy.
Plug Power looks like a good fuel cell stock to buy amid the global pivot to clean energy. The stock has sold off in 2021 amid the broader sell-off in fuel cell stocks. The company-specific issues related to PLUG didn't help matters either. However, the company seems to have put the worst behind it and looks reasonably priced now. PLUG looks like a good stock to buy now at these price levels.
PLUG stock's long-term forecast also looks positive.
The long-term forecast for PLUG stock also looks positive. The company has forged several partnerships including the partnership with South Korea’s SK Group to explore the hydrogen economy in Asia. SK Group also invested in the company, which was seen as a stamp of approval from one of South Korea’s biggest conglomerates.
Plug Power has launched a joint venture with Renault Group for hydrogen-powered light commercial vehicles and is targeting a 30 percent market share in Europe by the end of this decade. The company has also partnered with BAE Systems to produce hydrogen-powered busses.
While battery electric vehicles are popular in the passenger car market, hydrogen vehicles have an edge in long-haul commercial vehicles given their high payload and towing capacity. Plug Power has also partnered with Acciona for a joint venture and plans to capture 20 percent of the green hydrogen business in Spain and Portugal by 2030.
How high can PLUG stock go?
During the earnings call for the second quarter of 2021, PLUG said that it has a pipeline of $2 billion for electrolyzers. Plug Power is focusing on the green hydrogen market, which makes it an attractive green energy play.
Overall, the recent plunge in PLUG stock looks like a good buying opportunity and the stock could rise higher from these levels. The street high target price for PLUG is $78, which would mean the stock moving 200 percent higher from these levels over the next 12 months.