Plug Power (PLUG 1.26%) stock kicked off Thursday on a high note, surging 13.7% in early-morning trading. An analyst upgrade just ahead of earnings is fueling investor interest in the hydrogen stock.
All eyes on Plug Power's earnings
Truist analyst Jordan Levy raised Plug Power stock's price target by 33% to $4 per share yesterday, just a couple of days ahead of the company's earnings. Plug Power will announce its fourth-quarter numbers on March 1. Levy may have upgraded the stock's price target, but that doesn't reflect much upside from the stock's current price.
Plug Power issued a going-concern warning in its third quarter, stating that its cash balance will not last more than 12 months. The stock crashed, only to rebound sharply in recent weeks after Plug Power tried to calm investors' nerves by announcing that it is close to finalizing a $1.6 billion loan from the Department of Energy. The company also started production at its green hydrogen plant in Georgia, which it believes could significantly cut costs once fully operational.
Plug Power, however, still requires money to run its day-to-day operations. It will likely report another big cash burn in the fourth quarter, and things are unlikely to improve anytime soon, at least not until the company secures funding.
Yet any analyst upgrade for a company that's in such a dire state is bound to drive its stock higher, and that's what's happening today. In a recent interview with Barron's, Plug Power's CEO, Andy Marsh, said he was confident that the company will be much stronger by the end of the year. Investors are perhaps hoping to see some green shoots in Plug Power's upcoming earnings report and buying the stock today.
Should you buy Plug Power stock ahead of earnings?
I'll be blunt and answer that with a straight no. Sure, a Department of Energy loan could be a game changer for Plug Power, as it could use the money not only to run operations but also to build the new hydrogen plants that are currently under development or construction. However, there's no knowing when or even if the company will secure the funding. In between, it will have to continue with whatever little money it has left, and that's not going to paint a pretty picture in numbers, at least not on March 1.
