Analysts' price targets can give investors some insight into how much bullishness and excitement there is behind a particular stock. But investors should be careful in relying too much on price targets as they can -- and do -- change over time. So what might look like a great stock today may not be nearly as promising in several months' time.
A couple of stocks that have upside of 90% or more, according to analysts, are Plug Power (PLUG -2.62%) and Ginkgo Bioworks (DNA -6.33%). Are they right about these stocks, and are they good buys right now?
1. Plug Power
Plug Power develops hydrogen fuel cell systems that can replace batteries. It's a clean energy play for investors and one that could lead to significant growth opportunities.
Analysts from Grand View Research project that the global hydrogen generation market will be worth more than $317 billion by 2030, more than double its current market size of roughly $170 billion. That averages out to a compound annual growth rate of 9.3%.
The company has some big customers, including Amazon and Walmart, which have been showing interest in hydrogen and reducing their emissions in the years ahead.
In 2022, Plug's revenue totaled $701 million -- up nearly three times from the $230 million it reported just three years earlier in 2019. It has already achieved significant growth. However, the danger is that along with rising revenue, costs have soared as well, and the company's net loss was $724 million last year -- more than eight times the $86 million loss it posted three years earlier.
The volatile growth stock has declined 33% over the past year and is just a few dollars away from its 52-week low of $7.39. Many analysts have been trimming their price targets on Plug Power in recent months, but with a consensus target of over $20, they still see more than 90% upside for the stock.
Plug Power certainly has the potential to be a big name in hydrogen as companies look to go greener, but its lack of profitability poses a big risk, and it's one that investors shouldn't ignore. More downgrades could be coming for the stock, and for now, this is one that I would avoid until the company's financial results improve significantly.
2. Ginkgo Bioworks
Ginkgo Bioworks is involved in the development of bioengineered products. It can help businesses in multiple industries by programming cells to improve crop production, aiding in vaccine development, producing rare cannabinoids, and many other ways. There is a plethora of opportunities for Ginkgo, as McKinsey Global Institute estimates that the total market for bioengineered products could be worth up to $4 trillion by 2040.
Ginkgo has seen significant growth already, reporting $478 million in sales for 2022, up from just $54 million in 2019. However, like Plug Power, it has also been an unprofitable operation. Losses last year totaled a whopping $2.1 billion, compared with a loss of $119 million just three years earlier. For 2023, the company projects revenue of just $275 million as demand for COVID-19 testing products and services declines.
Wall Street analysts have been reducing their price targets for Ginkgo, but its consensus remains at just over $4, which would suggest an upside of 110% from where the stock trades right now. As with Plug Power, there's plenty of risk for investors, given how deeply unprofitable Ginkgo is.
Investing in the business may pay off in the long run, but it could be too early to invest in the company for most investors. And while price targets remain high for now, it may only be a matter of time before analysts trim them further if Ginkgo is unable to strengthen its financials -- especially its abysmal bottom line.
