Don’t Rush to Buy Plug Power Just Yet

Stocks reflect declines on monitors as people work on the floor of the New York Stock Exchange Thursday, Feb. 27, 2020. (AP Photo/Craig Ruttle)

Plug Power (PLUG) took a hit on accounting issues.

At the moment, the stock is down $5.25, or 12.3% after announcing accounting errors for 2018, 2019, and for the first three quarters of 2020.

According to a company press release, “The accounting related to the restatement is complex and technical and involves significant judgments in how to apply U.S. GAAP, given the innovative nature of the Company’s business and its leading position in a new and rapidly developing industry. The revised accounting will change how the Company accounts for certain transactions and items, but is not expected to impact the Company’s cash position, business operations or economics of commercial arrangements. The Company continues to expect to achieve its previously stated gross billings targets of $475 million in 2021, $750 million in 2022 and $1.7 billion in 2024.”

Shortly after, analysts at Truist downgraded the stock to a hold rating, noting, “We expect limited opportunity for outperformance in the near-term.  While the company reiterated long-term targets and the accounting issues appear transitory in nature, we see limited upside until resolution,” as quoted by Bloomberg.

However, Cowen’s Jeffrey Osborne still has a buy rating with a target of $75.  In addition, analysts at B. Riley also see a buy opportunity on the pullback.  `We wouldn’t rush in to buy PLUG just yet, though.  After gapping lower on the day, we’re waiting for confirmation of a bottom, and for the news to be fully priced in here.

At the moment, you can probably find better opportunity in competitors, such as Ballard Power (BLDP) and Bloom Energy (BE).  Hold off on PLUG until a bottom is in place.


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