Government initiatives to minimize carbon emissions are driving the increased use of hydrogen to generate electricity. Furthermore, increasing investments in research and development by leading companies to produce hydrogen from renewable and eco-friendly sources will likely fuel the growth of the global hydrogen-generating market, which is expected to reach $219.2 billion by 2030, registering a 5.4% CAGR
Even though hydrogen-fuel infrastructure is in its initial stage of development, the sector is expected to grow substantially over the long run, with governments moving to decarbonize fuel and promote clean energy usage. The United States is one of the world’s early adopters of sustainable energy solutions for industries.
Given this backdrop, we think it could be wise to add hydrogen stocks Plug Power Inc. (PLUG) and Ballard Power Systems Inc. (BLDP) to one’s watchlist now. Wall Street analysts expect these stocks to deliver significant upside in the near term.
Plug Power Inc. (PLUG)
Latham, N.Y.-based PLUG delivers comprehensive hydrogen fuel cell systems for the North American and European electric mobility and stationary power sectors. It focuses on proton exchange membrane (PEM) fuel cell and fuel processing technologies, fuel battery hybrid technologies, hydrogen and green hydrogen generation, storage, and dispensing infrastructure. In addition, it has a strategic partnership with Airbus SE to use green hydrogen to decarbonize air travel and airport operations.
Last month, Edison Motors, a renowned Korean electric vehicle manufacturer, announced a collaboration with PLUG to develop and commercialize a hydrogen fuel cell-powered electric city bus. The companies plan to create a fuel cell electric bus prototype by the second half of 2022 and deploy a mass-market platform by the first half of 2023.
For the third quarter, ended September 30, 2021, PLUG’s revenue increased 34.5% from the year-ago value to $143.92 million. Its cash and cash equivalents grew 156.9% for the nine months ended September 30, 2021, to $3.37 billion. And the company’s net cash from financing activities surged 506.9% to $3.58 billion over this period.
Analysts expect PLUG’s EPS to increase 64.7% in its fiscal 2021 and 56% in the following year. A $898.02 million consensus revenue estimate for fiscal 2022 represents a 79.9% increase year-over-year. The stock has gained 12.7% in price over the past three months.
Of 17 Wall Street analysts that have provided ratings for the stock, 13 rated it Buy, and four rated it a Hold. Closing yesterday’s trading session at $28.79, the $48.29 average analyst price target represents a potential 67.7% upside.
Ballard Power Systems Inc. (BLDP)
BLDP designs, develops, manufactures, and services proton exchange membrane fuel cell devices in Canada. The Burnaby, Canada-based company offers heavy-duty modules, maritime systems, fuel cell stacks, backup power systems, and material handling devices. In addition, the company has formed a strategic partnership with Linamar Corporation to co-develop and sell fuel cell powertrains and components for class 1 and 2 vehicles in North America and Europe.
Last year, BLDP launched a three-year project in collaboration with Caterpillar Inc. (CAT) and Microsoft Corp. (MSFT) to showcase a power system using large-format hydrogen fuel cells to create dependable and sustainable backup power for data centers. The project is supported and partially funded by the U.S. Department of Energy (DOE) through the [email protected] initiative and is endorsed by the National Renewable Energy Lab (NREL).
For the third quarter, ended September 30, 2021, BLDP’s revenue came in at $25.2 million. Its gross margin amounted to $2.8 million over this period. The company’s cash reserves increased 238% year-over-year to $1.22 billion.
BLDP is expected to generate 25.3% revenue growth in 2022. And its EPS is estimated to increase 13.8% in the same period.
Of the six analysts that have provided ratings for the stock, two rated it Buy, and four rated it a Hold. The $19.76 consensus price target represents a 56.5% potential gain from its $12.63 last closing price.
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PLUG shares rose $0.26 (+0.90%) in premarket trading Tuesday. Year-to-date, PLUG has gained 1.98%, versus a 0.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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