Plug Power (PLUG +0.34%) is a controversial stock. According to some of the Wall Street analysts who cover the company, shares could more than double in price over the next year. Others, however, think Plug Power stock will fall in value by as much as 75%.
Which argument is more convincing? Let's weigh the reasoning behind a couple of those experts' predictions.
NASDAQ: PLUG
Key Data Points
A deeply bearish view on Plug Power stock
Citigroup analyst Vikram Bagri is one of the most bearish analysts covering Plug Power stock. On Oct. 20, he reiterated his 12-month price target of $0.75 on the stock. That would be a roughly 75% decline from its recent price of about $3 per share. Even as Plug Power stock has risen nearly 250% over the last six months, Bagri has maintained conviction in his bear thesis.
What makes Bagri so bearish? While we don't have the exact details of his latest report to clients, it's not hard to speculate on the reasons. In recent weeks, I published a 25-year outlook for Plug Power. The conclusions weren't pretty. There are three main areas of concern.
First, hydrogen fuel systems are still many years away from becoming economically viable. In the meantime, companies that manufacture such systems -- Plug Power included -- will remain reliant on government subsidies and pilot customers willing to test the technology on a small scale.
Of course, being a company developing early-stage technology isn't a problem in and of itself. But Plug Power is on borrowed time due to the second major area of concern: funding. Right now, Plug Power is losing roughly $250 million per quarter. That means its annual losses are equal to nearly 30% of its market cap. To compensate, management has made massive use of secondary stock sales to keep the company financially afloat. Again, this isn't an unusual strategy for an early-stage company with a promising technology. But hydrogen power cells are still years, if not decades, away from mass adoption. So while there may be a future in which Plug Power succeeds as a business, it could be one in which current shareholders still lose due to too much share dilution along the way.
Investors should note that Bagri hasn't always been bearish on Plug Power. In 2023, he had a buy rating on the stock, predicting that the company's "aggressive growth plans and substantial operating leverage should allow strong margin expansion." Things didn't work out as planned. Shares are down by more than 75% since he made that prediction.
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Could Plug Power stock rise by 136% in the next year?
On the other side of the debate sits H.C. Wainwright analyst Amit Dayal, who is the most bullish of those covering Plug Power. He recently reaffirmed his 12-month price target of $7 on the stock. That implies more than 100% in potential upside over the next year. Dayal offers two main reasons for his bullishness.
First, he is excited about the company's prospects in Europe, where it "successfully completed the first phase of its hydrogen supply delivery for the H2CAST project." It's true that hydrogen power systems remain economically unviable without some government assistance to encourage their adoption. But Europe has some of the strongest clean energy mandates in the world, and building a presence on that continent bodes well for Plug Power's long-term revenue outlook.
The company's potential for success in Europe brings us to Dayal's second reason for bullishness: rising revenues. He believes sales will grow substantially from $685 million in 2025 to $14 billion by 2036. That's a compound annual growth rate of more than 30% -- roughly the growth rate that the artificial intelligence industry is expected to achieve. Gross margins, meanwhile, are expected to move from negative levels to at least 20% by 2029.
Here's the catch: H.C. Wainwright, the company that Dayal works for, could indirectly profit from Plug Power's success. The firm was part of the company's last funding round, helping sell additional blocks of Plug Power stock to raise fresh cash. As always, analysts' predictions should simply be another piece of the puzzle that helps guide investors to their own opinions. It's important to do your own research, and not just follow analysts who agree with your portfolio positions.
