Technical Indicators Point to 125% Upside For Plug Power Inc
Plug Power Inc (NASDAQ:PLUG) stock has surged 113% year-to-date. Thanks to strategic acquisitions, in-demand products, and a strong outlook, the business is poised to make strong gains in the second half of 2019, with momentum carrying into 2020.
The Latham, New York-based company’s stock is currently trading at $2.65 per share. Wall Street analysts see PLUG stock advancing an additional 51% over the next 12 months, putting it at $4.00, though that might be a little conservative.
Plug Power stock has a history of flirting around the $5.00 level. Right now, it has near-term resistance near $3.00, but above that, the next tested resistance level is at $6.00, suggesting potential for a 125% increase from current levels.
Plug Power Inc Overview
Plug Power is a renewable energy company that designs and manufactures hydrogen fuel cells for vehicles that can replace those powered by electricity and those that use conventional lead-acid batteries. (Source: “Plug Power Investor Presentation June 2019,” Plug Power Inc, last accessed June 13, 2019.)
Plug Power isn’t just a casual player in the hydrogen field; it is the world’s largest user of liquid hydrogen. Each day, the company uses 20 tons of liquid hydrogen, having surpassed NASA for the record in 2018.
Over the years, Plug Power has shipped tens of thousands of its fuel cells to blue-chip customers like Amazon.com, Inc. (NASDAQ:AMZN), FedEx Corporation (NYSE:FDX), Home Depot Inc (NYSE:HD), General Motors Company (NYSE:GM), Nike Inc (NYSE:NKE), Toyota Motor Corp (NYSE:TM), and Walmart Inc (NYSE:WMT).
In 2018, Plug Power Inc reported full-year revenue of $174.3 million, and now the company is targeting revenue of $500.0 million for 2022. (Source: Ibid.)
|PLUG Stock Information|
|Market Cap||$646.7 Million|
|Shares Outstanding||245.4 Million|
|50-Day Moving Average||$2.51|
|200-Day Moving Average||$1.98|
(Source: “Plug Power Inc. (PLUG),” Yahoo! Finance, last accessed June 13, 2019.)
Q1 Results Reaffirm Full-Year Guidance
On May 8, Plug Power announced that revenue for the first quarter, ended March 31, 2019, came in at $18.6 million, compared to $26.4 million in the same prior-year period. Gross billings were $22.8 million, versus $28.3 million in the first quarter of 2018. (Source: “First Quarter 2019 Recap: Reaffirming 2019 Guidance,” Plug Power Inc, May 8, 2019.)
The first quarter is generally Plug Power’s lowest quarter seasonally. Other issues compounded the drop in gross billings, namely project timing related to revenue recognition.
This has played out in a higher inventory balance of $65.5 million at the end of the first quarter. At the end of the fourth quarter of 2018, Plug Power had an inventory balance of $47.9 million. This will result in Plug Power reporting significant sequential growth in the second quarter.
The company ended the first quarter with total cash of $109.2 million.
For the second quarter, Plug Power expects to report gross billings of between $55.0 and $60.0 million, which would represent sequential growth of 100%.
The company expects its gross billings to continue to grow throughout 2019. For full-year 2019, they are projected to be in the range of $235.0 to $245.0 million. At the midpoint, that would be a year-over-year increase of approximately 30%. (Source: Ibid.)
Plug Power Inc had a breakthrough fourth quarter, delivering positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first time in its history. Its first-quarter results were solid and the company reiterated its full-year guidance.
Plug Power continues to cut costs, attract larger customers, and make strategic acquisitions, all of which should help the company be EBITDA-positive from the third quarter and going forward. It also expects to be profitable in 2021, which should help juice Plug Power stock over the coming quarters.