Plug Power (NASDAQ: PLUG) shares fell almost 7% on Wednesday, following a 31% surge the previous day. The downturn followed a downgrade from BMO Capital Markets.
Analysts at BMO Capital Markets have revised their rating for PLUG stock, downgrading it from Market Perform to Underperform. This decision stems from their apprehension regarding the potential difficulties the company could encounter in obtaining funding from the Department of Energy (DOE).
The 12-month price target has undergone a revision, now set at $2.50, down from the previous $3.50.
Even with a favorable yearly update prompting a rise in stock, analysts at BMO Capital foresee a potential decline in the value of Plug Power’s shares.
Analysts have voiced concerns about the difficult path ahead for the disbursement of DOE funding.
They stated,
“We see increasingly arduous path between now and when and if DOE funding flows.”
In addition, despite the substantial $1.6 billion in DOE funding, they expressed doubts about the value addition of PLUG’s extra hydrogen plants.
In their words,
“Even with $1.6 billion in DOE funding we are skeptical of value accretion of PLUG’s additional hydrogen plants.”
This skepticism underscores the analysts’ cautious stance on the company’s prospects.
BMO Capital anticipates that Plug Power, faced with a reduced revenue base and weak margins, may need to issue equity in the hundreds of millions in the first quarter.
Plug Power (NASDAQ: PLUG) Stock Reaction
PLUG stock saw a decrease of 6.59% on Wednesday. The trading volume for the day was significantly high, with over 100.18 million shares traded. This number greatly surpassed the daily average of 41.25 million shares.
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