What happened
Plug Power (PLUG 2.75%) may have reported record fourth-quarter and full-year results last night, but investors were not impressed. As of 11:40 a.m. ET, shares of the hydrogen and fuel cell technology company were trading lower by 11%.
NASDAQ: PLUG
Key Data Points
So what
Plug Power's full-year and fourth-quarter 2022 revenue of $701 million and $221 million, respectively, were both records for the company. Sales in 2022 were up 40% compared to 2021 and the company expects to see 2023 revenue double year over year. But that wasn't enough for Wall Street, and analysts are cutting price targets on the stock today.
Now what
While the company's gross margin improved in the fourth quarter, it was still a negative 36% as Plug Power accumulated an operating loss for the full year of $680 million. The company does expect its hydrogen fuel cell and production businesses to become profitable in 2023 with gross margin expanding from 10% this year to 30% by 2025. But investors apparently want to see that to believe it.
Image source: Getty Images.
Several Wall Street analysts cut price targets on the stock today. KeyBanc Capital Markets analyst Sangita Jain called the results "lackluster" and reduced that firm's price target from $31 to $25 per share, noting the risk of project delays. Chris Dendrinos from RBC Capital also cut Plug's price target by more than 10% to $17 per share, citing less confidence in the outlook.
Shares of Plug Power closed yesterday at $14.21 per share, so those analysts still believe there is upside to the stock, but the risks and slower progress than anticipated have many investors deciding to put their money elsewhere today, at least for now. If Plug Power does achieve its growth and margin targets, the stock could well rise from here. But many aren't willing to take that risk until the company achieves some of its business milestones.
