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Plug Power (NASDAQ:PLUG) -2.9% in Tuesday’s trading as Seaport Global downgraded the stock to Neutral from Buy with a $4.75 price target, saying it sees balanced risk-reward at the current valuation while the company seeks to raise needed capital, stanch cash burn and improve margins.
Plug Power (PLUG) is struggling with negative gross margin – down 69% in Q3 2023 – and Seaport analyst Manav Gupta said he does not see gross margin turning positive in 2024, and “the only way to convince long-term investors that PLUG has fixed its cash burn problem is to provide a concrete path to positive gross margin.”
Plug’s (PLUG) stock has rebounded recently as the Georgia plant is now online, the Department of Energy loan is moving ahead, and management said moving forward it will focus less on top line growth and more on cash management, which Gupta said is “a major positive.”
But Gupta said he expects to stay on the sidelines until clean hydrogen adoption reaccelerates and/or Plug (PLUG) “seems on the cusp of profitability.”
Separately, Plug Power (PLUG) said it has re-started operations at its Tennessee hydrogen plant, adding ~10 tons/day of liquid hydrogen supply back onto the U.S. market.