Plug Power Inc (NASDAQ:PLUG) investors were closely watching Governor Andrew Cuomo’s visit to the company’s facility as they expected Cuomo to make some major announcement. But the big announcement came from Ballard Power Systems Inc. (NASDAQ:BLDP) (TSE:BLD). The Canadian company said Wednesday that it had signed a long-term deal with Plug Power to supply fuel cell stacks for GenDrive.

Plug Power Inc Deal Removes An Overhang For Ballard Investors

Plug Power deal gives Ballard an improved revenue visibility

The new deal will run through 2017, and the companies have provisions for two 1-year extensions. The existing supply agreement was set to expire at the end of this year. Though neither company disclosed financial terms of the deal, it will ensure a steady supply of fuel cell stacks for the Latham, New York-based company.

Cowen & Company analyst Jeffrey Osborne said in a research note that this deal is a positive for Ballard Power Systems. It gives the company an improved revenue visibility. Shipments to Plug Power make up 10-25% of Ballard’s quarterly revenues, and Osborne expects this trend to continue as Plug Power has a heavy backlog. Cowen has an Outperform rating with $4.55 price objective on Plug Power, and a Market Perform rating with $4 price target on Ballard.

Plug Power to maintain its healthy growth

The research firm expects Plug Power to grow at a healthy rate going forward as Wal-Mart Stores, Inc. (NYSE:WMT) distribution sites are built out. Osborne says the new deal has removed an overhang from Ballard investors. Ever since Plug Power acquired ReliOn in April, there have been speculations that the company may bring some of its fuel cell stack development in-house, lowering its reliance on Ballard. But the new deal should boost investor confidence.

During the second quarter this year, Ballard generated $4.6 million in revenue from shipments to Plug Power. In the first half of 2014, its revenue from Plug Power soared 177%. Every time the Latham-based company announces new orders, Ballard benefits directly.

Plug Power shares surged 3.40% to $4.56 at 11:55 AM EDT on Friday.