MW Plug Power's stock slides after analyst downgrade amid 'escalating headwinds'

By James Rogers

'Escalating headwinds suggest worst isn't over' for clean-energy company Plug Power, analyst firm Seaport Research Partners warns

Plug Power Inc. shares have been downgraded to sell from neutral by Seaport Research Partners, which also set its price target for the hydrogen-fuel-cell company at $1.

Shares of Plug Power $(PLUG)$ were down 4.3% in premarket trading Monday.

"Escalating headwinds suggest worst isn't over, with risks to both top line and margin," Seaport Research Partners analyst Tom Curran wrote in a note released Monday. The analyst firm pointed to a flow of bearish macroeconomic news from both North America and Europe, Plug Power's two most important markets. "With President [Donald] Trump's 'Unleashing American Energy' executive order, the White House has called for a 90-day freeze and review of the [Energy Department Office of Clean Energy Demonstrations'] H2Hubs program," Curran wrote. "Only a fraction of the [Bipartisan Infrastructure Law's] $8 [billion] in grants has been obligated so far and, therefore, the bulk of funding is highly vulnerable."

Related: Rivian and Plug Power close government loan deals just before Trump takes office

The Clean Hydrogen Hubs (H2Hubs) program invests in hydrogen hubs across the U.S. in an effort to accelerate commercial-scale deployment of clean hydrogen.

Loans for clean-energy companies have been in spotlight around Trump's return to the White House. On Jan. 16, just days before the new president took office, Plug Power said it had closed a $1.66 billion loan guarantee from the DOE's Loan Programs Office. On the same day, electric-vehicle maker Rivian Automotive Inc. $(RIVN)$ said it had closed its loan agreement with the LPO for up to $6.6 billion in financial support.

A shifting landscape for renewable energy across the Atlantic could also weigh on Plug Power, according to Seaport Research Partners. The analyst firm highlighted the recent 2024 monitoring report from the Agency for the Cooperation of Energy Regulators, which said that Europe is likely to miss its 2030 renewable hydrogen targets. Seaport Research Partners also pointed to the recent collapse of Germany's ruling coalition, which forced Vice Chancellor Robert Habeck to abandon his Power Plant Security Act, which would have supported the construction of mainly hydrogen-ready gas-fired plants.

Related: Plug Power disappoints with its forecast but says it's still making progress

Plug Power has not yet responded to a request for comment.

The company narrowed its losses in its third-quarter results in November, but shares fell on a lowered revenue forecast for the full year.

On Monday, Plug Power said that it has boosted its liquidity with a $30 million federal investment tax credit transfer. The tax credit was transferred on Jan. 24 "to a major investor with a strong track record of purchasing comparable credits," the company said in a statement. "The $30 million ITC transfer represents Plug's first use of the transferability rules under the Inflation Reduction Act (IRA) of 2022 and is among one of the first transfer deals for hydrogen storage and liquefaction assets."

Related: With meme stocks in a lull, here's where retail investors may turn their attention next

Last year Plug Power was one of a number of heavily shorted names swept up in a meme-stock wave. Short interest as a percentage of Plug Power's public float of shares is 24.1%.

Plug Power shares have fallen 38.8% in the last 12 months, compared with the S&P 500 index's SPX 24.7% gain.

-James Rogers

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January 27, 2025 09:39 ET (14:39 GMT)

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