Plug Power hosted a symposium late last week announcing further plans to build a “hydrogen pipeline” or holistic hydrogen ecosystem in the US and around the world. We were optimistic about the results of the event and believe that the announced plans will allow the company to strengthen its financial profile by increasing revenue in new areas of activity. The company has expressed confidence in meeting or even exceeding its financial targets for 2024. We increasingly believe in the corporate transformation of the company as it expands into adjacent verticals such as stationary power and fuel. We believe that the company’s expertise in logistics solutions can be used for other areas of growth. We maintain a positive attitude towards the Plug Power business. Our target estimate for the fair value of the company’s shares is $ 41.
TIKR:
PLUG
PRICE:
$32
TARGET PRICE:
$41
UPSIDE
28%
Plug Power will open 3 factories in 2021, bringing the total number of factories to 4 by the end of 2022, 6 by 2023 and 13 by 2025. By 2025, the company plans to reach a production capacity of 500 tons of environmentally friendly hydrogen per day. Plug Power intends to enter new energy markets as well as the aerospace industry. Thus, by 2025, revenue will reach $ 3 billion due to the expansion of the product portfolio, which corresponds to an annual growth rate of 50% (CAGR).
At the end of 2022, the company plans to demonstrate revenue growth to $ 825-850 million, which corresponds to an increase of 65% compared to 2021. The growth will be driven by increased capacity at the Gigafactory, growing sales networks and expanding global partnerships. Critical to Plug Power’s medium-term growth are joint ventures with Renault, SK in Korea for the production and distribution of hydrogen, and with Acciona for the production of green hydrogen in the Iberian Peninsula. Acquisition of Applied Cryo Technologies (ACT) will help build a liquid hydrogen delivery network. In addition, Plugs will partner with Fortescue to build a 2GB cell to expand its reach into Oceania.
Plug Power designs and manufactures GenDrive fuel cell power systems for Class 1, 2, and 3 forklifts and rider pallet trucks. Replacing lead-acid batteries improves productivity with rapid refueling and steady power output, saves space by eliminating battery charging rooms, and reduces emissions. GenFuel hydrogen infrastructure and fuel and GenCare five-year maintenance contracts complete the GenKey turnkey offering. Product and manufacturing improvements should help continue to drive down cost. It serves three market segments, food distribution, retail, and manufacturing; customers include: Walmart, Amazon, Kroger, Sysco, Wegmans, Ace Hardware, Lowe’s, CVS Pharmacy, Coca-Cola, P&G, Carter’s, BMW, Mercedes, VW, Ikea, and Stihl. The company has performed trials with FedEx and has developed a modular approach to enter higher powered solutions while minimizing additional development costs.