Shares of Plug Power (PLUG) were on a downward trend after Seaport Research analyst Tom Curran revised his rating on the stock from Buy to Neutral. While no specific price target was given, Curran stated that he would stay on the sidelines until Plug showed signs of profitability.
According to Curran's research note, the current valuation of PLUG presents a balanced risk-reward scenario. He believes that Plug must focus on raising external funding with minimal dilution while also reducing its cash burn rate and improving margins. Curran expressed doubt about Plug's ability to achieve the most cost-effective and optimal solution.
As a result of the downgrade, Plug shares declined by 2.6% to $4.23 on Tuesday. Over the past year, the stock has experienced a significant drop of 73%.
One of the key challenges Plug Power faces is its financial position. In its third-quarter report, the company issued a warning regarding its financial situation, which caused shares to plummet by 40% on November 10. Plug attributed the performance shortfall to unprecedented supply challenges in the hydrogen network in North America.
However, Plug CEO Andy Marsh announced in mid-January that negotiations with the Department of Energy were complete for a $1.6 billion loan facility. This facility aims to support the development, construction, and ownership of up to six hydrogen production facilities.
Meanwhile, aside from Curran's rating change, investors were also monitoring Plug's latest update. The company revealed that it had restarted operations at its hydrogen plant in Charleston, Tennessee. This development is expected to reduce the average cost of delivered hydrogen and positively impact Plug's fuel margins.
In conclusion, while Plug Power's stock undergoes fluctuations, its strategic initiatives in securing funding and enhancing hydrogen production facilities may contribute to future growth.