Why Plug Power Inc Stock is Charging Higher Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hydrogen forklift system maker Plug Power Inc (NASDAQ: PLUG  ) jumped as much as 19.4% today after an analyst upgraded the stock.

So what: Analyst Aditya Satghare of FBR Capital Markets initiated coverage on Plug Power with a buy rating and an $8 price target. Satghare said the company may supply components for 10% of the U.S. forklift market by 2017 and revenue may exceed $200 million by then.  

Now what: This is an audacious call considering that Plug Power's revenue over the past year was just $25.7 million. Investors should also consider that Ballard Power Systems, who actually makes Plug Power's fuel cells today, is also in the forklift business so there will be competition in the market.

When you consider that Plug Power's current market cap of $822 million is still over 4 times Satghare's revenue call three years from now I'd say buying today is risky at best. Plug Power is still reporting massive quarterly losses and even if the forklift market does move to hydrogen there's no guarantee it will be a winner. Not to mention that analysts have a poor record against the market and little incentive to get their calls right. I certainly wouldn't be a buyer today.

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  • Report this Comment On July 16, 2014, at 6:59 AM, knwmn wrote:

    You should do more research about Plug and the markets it serves:

    1. It's not just forklifts as forklifts have already strongly begun and are continuing to move toward hydrogen.

    2. $200 million in revenue is a very conservative number. $150 million came from one customer. That order will be refilled about every 5 years.

    3. Plug bought Relion and will be producing its own fuel cells beginning 2015. This will reduce costs.

    I hope in the future we can read articles by Motley Fool that demonstrate an awareness of the firm they are covering. This uninformed fluff casts a negative light on the Motley Fool.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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8/28/2015 4:00 PM
PLUG $1.76 Up +0.01 +0.57%
Plug Power, Inc. CAPS Rating: *