What happened
In what was a mixed month for fuel cell stocks, FuelCell Energy dipped more than 9% while Ballard Power Systems inched nearly 5% higher.
But Plug Power (PLUG 4.02%) outshone them both. Continuing the 8% climb that it rode through May, shares of Plug Power rose 11% in June, according to data provided by S&P Global Market Intelligence. The stock's rise is a welcome sight for investors, who saw shares plummet nearly 55% from February through April. In addition to some bright spots in Plug Power's Q1 2021 earnings report, investors hit the buy button in response to favorable takes on the stock from Wall Street.
Image source: Getty Images.
So what
Missing revenue and earnings estimates didn't deter investors from picking up shares of Plug Power last month. Instead of souring on the $72 million in revenue that the company reported in Q1 2021 -- below analysts' $76.9 million estimate -- investors celebrated the company's rosy outlook. During the conference call, Andy Marsh, Plug Power's CEO, emphasized management's steadfast belief that the company will generate a gross margin of about 30% by 2024. Besides the sales shortcoming, investors paid little heed to the company's $0.12 loss per share (analysts expected a $0.06 loss per share), focusing more on the company's expectation that hydrogen prices will decline in the second half of the year and into 2022. Additionally, investors rejoiced at the news in the company's shareholder letter that Plug Power's gigafactory in Rochester, New York "is expected to be in full ramp-up mode by the fall of this year."
Besides Main Street investors, Wall Street seemed impressed with Plug Power's results. Shortly after the company reported earnings, Barclay's raised its price target on the stock to $27 from $24, according to Thefly.com, while B. Riley raised its price target to $51 from $50. RBC Capital also took a bullish stance, initiating coverage on Plug Power on June 30 with a $42 price target and outperform rating.
Now what
Dig a little deeper into the company's earnings report, and you'll find that the usual concerns persist. Optimists may point to the fact that the company's $0.12 loss per share was the same as what it reported in Q1 2020, but in fact, the loss was worse. Plug Power's net loss was $61 million in the recently completed quarter, representing a steeper loss than the $37 million net loss it reported in Q1 2020. The comparable year-over-year loss per share was more reflective of the share count, which grew to about 513 million in Q1 2021 from 305 million during the same period last year. Another troubling sign can be found in the cash flow statement, as the company reported using $117 million in operating cash flow compared to $60 million in Q1 2020.
Plug Power may be the darling of the fuel cell crowd, but plenty of risks remain; thus, renewable energy-focused investors would be wise to look elsewhere.
