Plug Power Inc. (NASDAQ:PLUG) recently unveiled its second-quarter results, falling short of Wall Street's expectations.
JPMorgan analyst Bill Peterson remains cautious, calling it a "show-me story" that requires evidence of consistent performance to overcome its current challenges.
Timing Is Everything
Plug Power reported second-quarter revenue of $143 million, missing JPMorgan's forecast of $174 million and the consensus of $186 million. The miss was largely due to the timing of electrolyzer revenue recognition. According to Peterson, Plug Power could have beaten expectations had $50 million in sales not been deferred, .
Looking ahead, Plug introduced a full-year revenue guidance of $825-925 million. While this aligns with JPMorgan's estimates, it falls short of the $928 million consensus. The company anticipates a stronger back half of the year, driven by its Energy business growth.
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The Latham, New York-based company reported gross margins of -92%, worse than both JPMorgan's estimate of -61% and the consensus of -43%. However, Peterson noted some progress, particularly in fuel margins, though the road to profitability remains long.
It now targets "low double-digit negative margins" by year-end.
Plug Power Challenges, Opportunities
Plug Power continues to face cash flow issues. Peterson emphasized, "the current operating and capital markets environments are challenging," but noted the company's potential for growth in hydrogen fuel cells.
Material handling revenue remains soft. It expects to recover by 2025. Electrolyzer opportunities are also gaining traction. Potential deployments are on the horizon once U.S. policy challenges are addressed.
Investment Outlook: Neutral
Despite its potential, Plug Power remains a Neutral-rated stock. The company needs "multiple quarters of solid execution" to achieve sustained share outperformance, Peterson says.
Plug Power's journey requires patience, with execution being key to unlocking its potential in the hydrogen energy space. Investors will need to watch closely as the company navigates these hurdles.
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