Citi says that the green hydrogen stock could rise by more than 20%.

Posted By: EN Todayon: July 06, 2023In: Alternative Energy News

Citi believes that Plug Power will become the world’s largest supplier of green hydrogen. Vikram Bâgri, an analyst at Citi, initiated coverage of the company by giving it a high-risk and buy rating. His price target of 13 dollars implies a 22.1% increase from the close on Wednesday. “PLUG has a fully-integrated hydrogen-focused business with early mover advantages, cutting edge technologies and scale. In a note published on Wednesday, Bagri said that PLUG is well positioned to take advantage of the growing demand for H2 green in sectors with a high level of resistance. He continued, “The company is a leader in the material handling industry with nine publicly-disclosed pedestal customers, including Amazon, Walmart Home Depot, and GM,” as well as two more customers under discussion. Bagri stated that Plug Power will achieve positive gross profit margins in 2018 and aim to reach 30% gross profit margins by the year 2026. “The aggressive growth plans of the company and its substantial operating leverage will allow for strong margin expansion,” Bagri said. Analyst Bagri said that the company has enough cash equivalents and cash to sustain organic growth until early 2025. He did note that “capital requirements are substantial, and estimates of capital must be revised upwards.” According to Bagri, financial support from the Department of Energy can provide flexibility in this area, and also help the company expand its margins. He continued, “We think a favorable guideline on additionality/time match, progress toward gross margin improvement, and financial support from DOE could be all positive catalysts.” The shares have fallen almost 14% in the past year. Stocks have also fallen by more than 39% in the last 12 months. Michael Bloom, CNBC’s Michael Bloom, contributed to this report.