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Plug Power Stock Surges on Morgan Stanley Upgrade to Overweight

Plug Power climbs as Morgan Stanley says the company is 'well positioned to be a leader in the hydrogen economy.'

Plug Power  (PLUG) - Get Plug Power Inc. Report stock climbed on Wednesday after Morgan Stanley analysts upgraded the hydrogen-fuel-cell developer to overweight from equal weight and boosted their price target to $40 from $35.

Shares of the Latham, N.Y., company at last check were up 6.6% to $31.73.

Analyst Stephen Byrd said in a note that Plug Power is well positioned to be a leader in the hydrogen economy, according to The Fly.

Byrd said the upgrade was driven by the company's upcoming investor day on Thursday, accelerating growth, legislative support and an attractive risk/reward profile. 

The analyst said Plug Power is well positioned "at the outset of a significant transition point" in energy with the adoption and expansion of the use of green hydrogen. 

He cited the announcement of several strategic partnerships, $4 billion of cash on its balance sheet, accelerating revenue growth and the potential for "significant upside" from legislative support.

Byrd says green hydrogen will play a crucial role in decarbonization. 

Plug is likely to increase its outlook at the upcoming investor day, the analyst said.

The company said on Wednesday that it had entered a partnership with Airbus EADSY to study the feasibility of bringing green hydrogen to aircraft and airports.

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Also on Wednesday, Plug Power and Phillips 66  (PSX) - Get Phillips 66 Report said they’d agreed to jointly develop low-carbon hydrogen business opportunities.

Plug Power shares also got a boost on Tuesday after CEO Andy Marsh suggested, in an interview with Jim Cramer on CNBC's "Mad Money," that new deals with truck makers could be announced at the company’s hydrogen conference Thursday.

He said Plug already is cooperating with General Motors  (GM) - Get General Motors Company (GM) Report on materials handling.

B. Riley analyst Christopher Souther said Tuesday that the company's symposium would be key for investors interested in Plug Power's long-term potential.

Souther says management is likely to increase 2021 guidance and 2024 targets given the strength in materials handling and the additional adjacent market opportunities, "which should boast robust growth rates through the decade."

 In addition to the potential near- and mid-term guidance raises, Souther said, management could provide insight into the company's goals for 2025 and beyond. That should drive positive investor sentiment given Plug Power's opportunity set, he said.

The analyst, who affirmed a buy rating and $45 price target, said potential guidance raises could catalyze the stock.

Last week, Barclays analyst Moses Sutton upgraded Plug Power to equal weight from underweight and kept his price target at $27.

Sutton said the company's analyst day "could reasonably ignite some momentum" and drive the shares toward a new baseline for the next 6 to 12 months, or at least set a floor for the stock in the high-$20s.