Companies seeing their shares trading at penny stock levels are constantly looking for a breakthrough. Whether it is a new product, management revamp, or financial improvement, any of these can act as a trigger for the company’s stock. It appears that Plug Power (PLUG) may have found it in the form of a bullish note from leading broker Craig-Hallum.
The Minnesota-based broker has lifted its price target on PLUG stock to $4 from $2 while maintaining a “Buy” recommendation. Amid record production levels, analyst Eric Stine gave a thumbs-up to the company’s shift from a period of hyper-growth and heavy investment toward a more disciplined focus on core markets and cost efficiency.
The voices emanating from the management were also upbeat about becoming gross margin positive by the end of 2025 and EBITDA positive by the end of 2026.
Founded in 1997, Plug Power develops and supplies hydrogen fuel cell systems, electrolyzers, and integrated hydrogen infrastructure (production, storage, dispensing) intended to replace conventional batteries or provide backup power in various applications (material handling, electric vehicles, stationary power, etc.). Its market cap currently stands at $2.9 billion.
Although the stock is up 6.5% on a year-to-date (YTD) basis, PLUG’s share price has traded at penny stock prices (under $10) for the bulk of its time as a public company, eroding massive shareholder wealth over the years.
So, should Craig-Hallum’s endorsement be enough for investors to plug into the Plug Power stock? Let’s analyze.
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Although the management sounded confident of achieving operating profitability by the end of 2026, the reality is that the company has been around for more than a quarter of a century and has never reported profits. And recent performance has also not evoked confidence, as Plug Power’s bottom line has missed Street expectations consecutively over the past nine quarters.
A closer look at the company’s most recent results might reveal that Plug Power has finally turned a corner.
Maybe. Probably not.
Revenues of $174 million marked an annual growth of 21%, with the company’s platforms seeing strong traction among consumers. Losses narrowed to $0.20 per share from $0.36 per share but still came in wider than the consensus estimate of a loss of $0.15 per share.
Cash flows were also not a saving grace, as the net cash from operating activities was an outflow of $297.4 million for the first six months of 2025, ending June 30, although the outflow was lower than the prior year’s figure of $422.5 million. Overall, Plug Power closed the quarter with a cash balance of $140.7 million, which is less than half of its short-term debt levels of $296.9 million, raising liquidity concerns while also putting the company’s very existence in jeopardy.
Plug Power faces not only a shaky financial position but also softening interest in one of its core areas. For example, orders pending for its electrolyzer business declined by 38% from the year before, reaching just 198,973 megawatts. This part of the operation has dragged down performance ever since it started, leading to overall product gross margins that stayed in the red during the latest reporting periods.
Looking at the bigger picture, the firm’s entire backlog of orders shrank 29% annually to 782,370 megawatts, and its book-to-bill measure has stayed under one for seven quarters running. When that figure exceeds one, it usually means incoming business surpasses what gets shipped out, pointing towards strong demand for the company’s offerings. Conversely, Plug Power has yet to see that kind of momentum, which underscores ongoing struggles to build a solid flow of new deals.
Day-to-day activities have suffered too from insufficient support from policymakers in America and across Europe, prompting the scrapping of multiple big initiatives. Sectors like steel production and hauling freight commercially have pulled back on commitments to embrace hydrogen as a clean energy source and fuel cells, adding pressure to the company’s expansion outlook.
Executives have expressed approval for the latest extension of tax breaks aimed at boosting hydrogen and fuel cell manufacturing, though questions linger about how much these will actually lift order volumes.
In the end, the contracting backlog raises serious questions about whether Plug Power’s approach to business can hold up. These issues grow even more acute amid broader economic changes and the flux in government policies right now in the United States, piling on extra uncertainty for the company, making the case for owning the PLUG stock almost a lost one.
Taking all of this into account, analysts have unsurprisingly deemed PLUG stock a “Hold” with a $2.08 mean target price that, while surpassed, isn’t far from its current price. The high target price of $4.50 denotes an upside potential of about 87.5% from current levels. Out of 23 analysts covering the stock, five have a “Strong Buy” rating, 14 have a “Hold” rating, and four have a “Strong Sell” rating.
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On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
