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Plug Power Wavers; Canaccord Genuity Cuts to Hold, Pares Target

Plug Power sahres wavered Wednesday after Canaccord Genuity downgraded the producer of hydrogen projects to hold from buy, and cut its price target.

Shares of Plug Power  (PLUG) - Get Report wavered after Canaccord Genuity downgraded the producer of hydrogen projects to hold from buy and more than halved its price target to $31 from $69.

At last check, Plug Power shares clawed back to almost flat at $33.94 and ticked into the green for a bit after spending much of the trading day down as much as almost 6%.

Plug Power "is transitioning to more of an operational phase and will need to demonstrate profitability improvements to justify its healthy valuation," analyst Jed Dorsheimer said in a report

The target reflects the investment firm's estimate of 12.5 times its 2024 sales estimate of $1.7 billion for the Latham, N.Y., company.

On Tuesday Plug Power reported a wider-than-expected net loss of 12 cents a share.

But the stock rose that day on the back of stronger-than-expected revenue, which came in 76% higher at $72 million. Canaccord Genuity was expecting revenue of $67 million.

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"As Plug Power begins to focus on the execution of multiple projects simultaneously at different stages to develop the hydrogen market (from construction to technology development and qualification to production), costs are trending higher than previously expected," the analyst wrote.

"We expect these to continue, and while this might be offset by gradual gross margin improvements with increasing volumes, we feel this presents a new risk to the story."

On the positive side, "optimism is supported by new strategic partnerships (Groupe Renault, aviation customer, green hydrogen production plant in Camden, Ga.), as well as sustained interest for a hydrogen economy across Europe, South Korea and the U.S.," Dorsheimer wrote.

Plug Power projects in development include three that are expected to start operating in late 2022 or early 2023.

They are located in west New York, south-central Pennsylvania, and the Georgia facility. Camden County is on the Florida border, less than an hour north of Jacksonville.

These would come in addition to Plug Power's current plant in Tennessee, the analyst said.