What happened
Plug Power (PLUG 4.02%) shares fell as much as 7.5% to start the week. Shareholders have an analyst report to thank for that. As of 2:15 p.m. ET, the stock was still trading lower by 6%.
So what
Morgan Stanley analyst Andrew Percoco didn't suggest investors sell Plug Power stock in his latest report shared by Barron's today. His firm only changed its rating on the hydrogen fuel cell company's stock to the equivalent of a hold from a previous buy rating. But the price target cut was substantial enough for investors to take notice today and accelerate the drop the stock has experienced in the past month.
Now what
Percoco lowered the firm's price target for Plug stock from $35 to $15 per share. That's a reduction of nearly 60%. It's not hard to understand why the analyst isn't a fan of Plug Power right now.
The company has yet to generate profits and is betting on a growing hydrogen fuel economy. It currently is generating revenue mostly through sales of hydrogen fuel cells used for industrial mobile equipment like forklifts. But it is betting its future will be with generating green hydrogen for a transportation sector moving to use it as a fuel. Green hydrogen uses renewable sources to provide electricity for the process. That method is being supported by credits available through the Inflation Reduction Act that seeks to promote clean energy production.
Plug plans to produce its own green hydrogen and sell electrolyzers to the others in the industry. But that plan relies on the large-scale adoption of hydrogen as a fuel source. For now, that has analysts like Percoco saying to hold the stock and wait for further progress before diving in with both feet. That's a prudent approach unless investors just want to commit a speculative allocation amount since the stock could move materially in either direction.
