PLUG Stock Forecast: Plug Power Pushes Towards Profitability

 

This article was written by Julia Masch, a Financial Analyst at I Know First.

 

PLUG Stock Forecast

“Hydrogen fuel cells will play an important role in reducing our society’s reliance on fossil fuels,” said Silver. “Plug Power is the leading company in this rapidly growing sector and has already successfully introduced several generations of this critical technology.”

-Jonathan Silver, recently appointed to Plug’s Board of Directors

A Hydrogen Fuel Cell Diagram (Source: Flickr)

Highlights:

  • Expanding into Europe
  • Plug Power’s Strong Leadership
  • Current I Know First Bullish Forecast For PLUG

Plug Power (NASDAQ: PLUG) has developed and is now producing hydrogen fuel cells which are an alternative to lead-acid batteries and can be used to power forklifts. Over the last ten years, Plug Power has shipped over 20,000 hydrogen fuel cells to companies such as Amazon, Nike, and Walmart for use in their warehouses. Although Plug Power is down for the year, PLUG has increased by over 10% in the last month and still has a bright future ahead.

Expanding into Europe and Electric Delivery Vehicles

At the World of Material Handling conference on June 11, Plug Power announced a new partnership with Linde Material Handling. This collaboration will introduce Plug’s hydrogen fuel cells into Linde’s warehouses across Europe. The fuel cell technology will be introduced in many of Linde’s warehouse vehicles such as its electric forklifts and electric tow trucks. This partnerships signifies Plug’s expansion into Europe. Europe is a generally untapped market for fuel cell technology and if Plug can get a head start in this market, it could reap large rewards. The company has forayed into the European market before when it made deals with customers in France and this newest partnership with Linde will build on the company’s presence in Europe. Moreover, the partnership also shows the company is capable of working with medium sized firms rather than just with giants like Amazon and Walmart. Plug’s technology can be adapted for small and medium companies, and while these smaller companies will not contribute as heavily towards Plug’s revenue, they will help to diversify the company’s customers.

(Source: Wikimedia Commons)

Plug Power isn’t only working on expanding into the European market, but also into the Electric Delivery Vehicles market. Also in early June, Plug announce its acquisition of the previously private-owned American Fuel Cell (AFC). This company focuses on Membrane Electrode Assembly (MEA) technology which can be utilized to create power for fuel cells. Using MEA, Plug will be able to improve the efficiency of its hydrogen fuel cells as well as adapt the technology and accelerate Plug’s expansion towards electric delivery vehicles such as electric trucks. Fuel cells are the main power source for electric vehicles, thus Plug can use its newly acquired technology to create hydrogen fuel cells with even more power. This will allow Plug to develop on-road applications of their fuel cells. In May, Plug Power delivered FedEx its first fuel-cell dependent electric vehicle with on road capabilities. Plug has a history of innovation, therefore, the acquisition of AFC will speed up Plug’s entrance into the electric vehicle market. The electric truck market itself is expected to grow tremendously in the upcoming years and reach annual sales of 2.25 million units by 2025 according to Frost & Sullivan, a market research company.

Plug Powers Towards Profitability

Currently, Plug Power is not profitable. However, the company had YoY revenue growth of 91% which shows significant improvements for PLUG. The fuel cell company grew sales for hardware, services, and deliveries. In Q1 of 2017, fuel cell device sales were $1.8 million and services made up $400,000 of the company’s revenue. In comparison, in Q1 2018, fuel cell device sales more than tripled to $6.6 million and hydrogen infrastructure installation services increased over tenfold to $4.9 million and had total revenue of $27.2 million. Additionally, Plug Power expects revenue to continue increasing and expects total revenue for Q2 between $37 million and $41 million along with full year revenue somewhere in the range of $155 million to $180 million.While the company still has negative cash flow of $18.3 million, it is much less than last year’s cash flow of $30 million last year. The best way for the company to get to positive cash flow is increasing its revenue, which is currently in the works as it expands into Europe and the electric delivery vehicle markets.

Plug Power YoY Revenue Growth (Source: YCharts)

Plug Power’s Leadership

Plug Power recently names Jonathan Silver to its board of directors. Silver has previously worked at the United States Department of Energy under the Obama administration leading a $40 billion clean energy investment fund which also had $20 billion allocated towards electric vehicles. Now, Silver can bring his vast clean energy investment knowledge to Plug Power.

Additionally, for the past 10 years, Plug Power has been run by Andrew Marsh who has led a push towards profitability for the company. He has transitioned Plug from a research company into a leading manufacturer of hydrogen fuel cells. His continued strong leadership will hopefully lead to the company’s first profit in 20 years.

Technical Analysis

Currently and for the majority of the last month, PLUG has been trading above its 50 day simple moving average (purple) which signifies a bullish trend for the company. 

(Source: Yahoo Finance)

Current I Know First Bullish Forecast For PLUG

On July 6, the I Know First machine learning algorithm issued a bullish prediction for Plug Powers in the short and long term time periods. The strongest signal is 128.83 over the one year time horizon. This prediction also has a high predictability signal.

How to read the I Know First Forecast and Heatmap

Conclusion

Plug Power has a bright future ahead of it powered by its fuel cell technology. As it continues to develop its product and diversify its clients, it should make moves towards profitability. Additionally, both a technical analysis and the I Know First self-learning algorithm reveal bullish indicators for the alternative energy company. For all of these reasons, Plug Powers is a good stock to invest in right now, especially at its current low price which is hovering around $2.

Past I Know First Success For PLUG

On October 9, 2016, the I Know First algorithm issued a bullish prediction for Plug Power.

Since this prediction, PLUG rose almost 30%, highlighting the accuracy of the I Know First algorithm.

(Source: Yahoo Finance)

Current I Know First subscribers received this bullish PLUG forecast on October 9, 2016.

Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.