From the start of the year through the end of trading last week, Plug Power (PLUG 1.26%) stock has vastly underperformed the market. Whereas the S&P 500 rose 7.4% during this time frame, share prices of Plug Power fell about 18%.
However, one Wall Street analyst believes that Plug Power stock is set to reverse this downward trend and head higher. Hiking his price target 33% from $3 to $4, Jordan Levy, an analyst at Truist Financial, thinks Plug Power could soar about 16% from Wednesday's closing price of $3.43.
Levy predicates the stock's higher price target on investors' continuing enthusiasm for the company's hydrogen production announcement. In late January, Plug Power announced that it had commenced operations at a liquid hydrogen production facility in Georgia -- an important step in its pursuit of developing a robust hydrogen production infrastructure. Plug Power is targeting daily hydrogen production of 2,500 tons by 2030.
Investors are missing the mark on Plug Power if they click the buy button
For hydrogen investors who find Levy's price target encouraging, it's important to hold off before picking up shares. Levy set the $4 price target right before the company reported fourth-quarter 2023 financial results on Friday morning. While the company grew revenue 27% year over year, Plug Power, unsurprisingly, reported a steep loss of $2.62 per share, representing a steeper loss than the $1.25 per share loss it reported during the same period last year.
It's unlikely that shares will bounce back anytime soon and rally to Levy's price target. And even those who believe that they will should look elsewhere. The company's persisting inability to generate a profit and generate organic cash flow is deeply concerning. Until Plug Power demonstrates the ability to grow profits as well as revenue, it's best to watch this stock from the sidelines.
