On Friday, Citi analysts maintained their Sell rating on shares of Plug Power (NASDAQ:PLUG), with a steady price target of $1.50. The firm's position followed Plug Power's announcement that it has finalized a $1.66 billion loan guarantee from the Department of Energy's Loan Programs Office.
This financial milestone concludes a process initiated over three years prior and aligns with market expectations. According to InvestingPro data, the company's market capitalization stands at $2.5 billion, with the stock showing significant volatility and currently trading at $2.74.
Plug Power plans to allocate the loan towards the development of up to six green hydrogen production facilities, with the first expected to be in Texas, potentially operational by late 2026. The Texas project is set to benefit from a 15-year power purchase agreement and a production tax credit, thanks to its utilization of wind power for hydrogen production.
InvestingPro analysis reveals concerning fundamentals, with a negative gross profit margin of -82.46% and rapid cash burn rate. Get access to 12 additional ProTips and comprehensive analysis in the Pro Research Report.
However, Citi analysts have raised concerns regarding the financial implications for Plug Power until the Texas facility becomes operational. They anticipate that the company will bear the cost of debt on its balance sheet and will require additional cash to support operations, as per their estimates.
The Sell rating reflects the high-risk profile associated with these financial challenges. While the company maintains a healthy current ratio of 2.08, indicating sufficient liquid assets to meet short-term obligations, InvestingPro data shows the company remains unprofitable over the last twelve months.
In other recent news, Plug Power has seen significant developments. The company received a loan guarantee of $1.66 billion from the U.S. Department of Energy's Loan Programs Office, aimed at supporting the construction and operation of up to six green hydrogen production facilities. H.C. Wainwright maintained a Buy rating for Plug Power, while Susquehanna reaffirmed a Neutral rating but increased its price target to $2.50.
Morgan Stanley (NYSE:MS), on the other hand, maintained an Underweight rating, citing the company's high operating losses. Notably, Plug Power has entered into a purchase agreement with Allied Green Ammonia (AGA) to supply 3GW of electrolyzer capacity to AGA's green hydrogen-to-ammonia plant in Australia.
Furthermore, the company is anticipated to benefit from the Biden administration's decision to relax regulations surrounding a significant hydrogen production tax credit. These recent developments underscore Plug Power's commitment to advancing the hydrogen economy and supporting the transition to a net-zero emissions future.
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