On Friday, Piper Sandler adjusted its outlook on Plug Power Inc (NASDAQ:PLUG), reducing the price target to $2.50 from the previous $2.90. The firm kept its Underweight rating on the shares. The decision follows Plug Power's latest quarterly results, which fell short of expectations, with revenues missing projections significantly.
The company reported revenue figures that were 21% below Piper Sandler's estimates and 25% under the consensus forecast. Additionally, the adjusted gross margins were deeply negative at -99%, deviating from the already low expectations by 1800 basis points. Plug Power also experienced a higher-than-anticipated cash burn of $281 million for the quarter.
Despite the company reiterating its year-over-year growth expectations, Piper Sandler anticipates a revenue decline for Plug Power in 2024, primarily due to changes within the materials handling sector. Concerning liquidity, Plug Power recently drew an additional $148 million from its at-the-market (ATM) offering, leaving $845 million available.
Plug Power's guidance at the beginning of 2022 and 2023 was overestimated by an average of 30%, with the actual results being heavily weighted towards the latter part of the year. While the company has not yet secured the conditional loan approval from the Department of Energy (DOE), it remains optimistic about the approval, although no specific timeline has been committed to.
Piper Sandler acknowledged that a positive development regarding the DOE loan could create a short-term surge in the stock price. However, the firm maintains its Underweight rating, citing ongoing concerns about Plug Power's cash burn in the upcoming years, which it expects to be financed through equity.
InvestingPro Insights
In light of Piper Sandler's recent analysis of Plug Power Inc (NASDAQ:PLUG), additional insights from InvestingPro could provide a more comprehensive understanding of the company's financial health and market performance. InvestingPro Data shows a market capitalization of $1.9 billion, reflecting the scale of the company amidst its challenges. The revenue for the last twelve months as of Q1 2024 stands at $801.32 million, with a reported growth of 3.94%. However, this is overshadowed by a significant quarterly revenue decline of 42.81%.
InvestingPro Tips highlight critical concerns, including Plug Power's difficulty in maintaining gross profit margins, which were deeply negative at -62.68% for the last twelve months as of Q1 2024. This aligns with the -99% adjusted gross margins reported in the latest quarterly results. Furthermore, the company is quickly burning through cash, which is consistent with the higher-than-anticipated cash burn of $281 million for the quarter mentioned in the article.
Despite these challenges, it's worth noting that Plug Power's liquid assets exceed its short-term obligations, providing some cushion for immediate financial obligations. However, analysts have revised their earnings downwards for the upcoming period, and the company is not expected to be profitable this year.
For readers seeking to delve deeper into the financial metrics and forecasts for Plug Power, InvestingPro offers additional tips that could be crucial for making informed investment decisions. There are 11 more InvestingPro Tips available for Plug Power, which can be accessed through the InvestingPro platform. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, potentially aiding in their investment strategy.
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