What happened

Shares of two companies counting on a growing hydrogen economy rose today, after an analyst initiated coverage with a buy rating. The stocks of electric vehicle (EV) start-up Nikola (NKLA 8.91%) and hydrogen fuel cell maker Plug Power (PLUG -3.83%) rose on the analyst comments. After jumping almost 5%, shares of Nikola settled back to a gain of about 2%, while Plug shares pared some of its rise to a gain of 3.3% as of 10:35 a.m. EDT.

So what

Analyst Gregory Lewis from research firm BTIG started coverage of both companies with a buy rating, giving Nikola a price target of $18 and Plug Power a target of $40 per share. That represents potential gains of 16% and 34% respectively, versus Thursday's closing prices.

Sign showing H2 Hydrogen for hydrogen fuel.

Image source: Getty Images.

Now what

Both companies have had their issues over the last year. Nikola, which is still pre-revenue, was called out by a short-seller for exaggerations that resulted in its founder's resignation. The company is still working to win its reputation back as it focuses on building a hydrogen fuel cell electric vehicle (FCEV) and supporting infrastructure. Plug Power also made investors nervous when it reported negative net revenue for the full year 2020 and later said it would have to restate three years of financial results. 

The unusual negative revenue came as the company paid customers warrants from sales agreements. But both companies have since reported progress in the businesses, and Plug resolved its accounting reports without any change in cash level or existing business relationships. 

Today's analyst call seems to be recognizing progress is heading in the right direction, but investors should also realize that these both remain speculative plays for growing a hydrogen economy.