Plug Power (PLUG) came off recent highs Thursday after a J.P. Morgan analyst initiated coverage of the hydrogen fuel-cell company with a neutral rating and $60 price target, and raised concerns about valuation.
Shares of the Latham, NY-based company were falling 4.88% to $66.11 at last check.
Analyst Paul Coster said in a note to investors that the pace at which Plug Power "is mobilizing is breathtaking."
"We view PLUG as best in class in our coverage of the hydrogen/fuel cell space at present, but valuation is a challenge," Coster said.
The analyst said that while Plug Power is "our top pick in the hydrogen space," the stock is "fully-valued in our view."
Coster said he is looking for pullbacks in hydrogen pure-play stocks after the sector has outperformed the S&P 500 “massively." Plug Power has almost doubled since the beginning of the year, compared to a less than 2% rise in the S&P 500.
Last week, South Korean conglomerate SK Group said it will invest $1.5 billion in Plug Power, with SK Group receiving 51.4 million shares of Plug Power at $29.29 each.
The joint venture will start commercializing fuel-cell light commercial vehicles in Europe starting in 2021 with pilot fleet deployments.
These recent partnerships, Coster said, "give us confidence in the 2024 targets of $1.2 billion sales, $250 million in adjusted EBITDA."
On Wednesday, Riley Securities analyst Christopher Souther raised his price target on Plug Power to $79 from $52 while keeping a buy rating on the shares following the Renault agreement.
The Renault deal also caused Craig-Hallum analyst Eric Stine to boost his price target on Plug Power to $79 from $60 and maintain his buy rating on the shares.