Analyst Stephen Byrd says that the Latham, N.Y., company's stock price already reflects a significant portion of the expected rapid growth ahead of the company.
"PLUG's product advantages, strong balance sheet, and strategic partnerships position the company well for the transition to a hydrogen economy," analyst Stephen Byrd said.
"Even after forecasting double-digit revenue growth and strong margin expansion, we see modest stock-price upside."
Byrd set a $35 price target on the company. Plug Power shares at last check were off 9.3% at $29.29. Plug Power shares are down 13% year to date but up by more than a factor of seven over the past 12 months.
Plug Power has unveiled several strategic partnerships and has $5 billion in cash on its balance sheet, situating the company well, according to Byrd.
Plug's main product is a fuel cell power system used by forklifts. Morgan Stanley expects the company to keep expanding to serve multiple new markets, notably transportation.
"Even after modeling in double-digit revenue growth through 2050 and significant margin expansion, our discounted cash flow analysis results in a modest 8% upside from current levels," Byrd said.
The firm's price target implies multiples of 18 times 2023 enterprise value/sales and 0.6 times EV/sales growth.
That estimate falls near the median of hydrogen comparatives on those metrics and "at a modest discount to early-stage U.S. fuel-cell [comparatives] as we see steeper margin improvements at peers."