Plug Power Inc Lowers FY2015 Sales Forecast; Stock Tumbles

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Plug Power Inc Lowers FY2015 Sales Forecast; Stock Tumbles

Plug Power’s new full-year guidance is well below the consensus estimate of $123.7 million

Plug Power shares tumbled 9.12% on Wednesday to close at $2.89 after the company tempered its sales forecast for the current fiscal year. The fuel cell maker said it now expects FY2015 sales to be in excess of $100 million. Previously, Plug Power CEO had said that the company was on track to hit $130 million revenue in 2015.

Plug Power changing its old habit

In a conference call on Wednesday, Andy Marsh said that the company has issued guidance that ‘people could rely’ on. Plug Power has a long history of over-promising and under-delivering. Investors have criticized the company for setting higher expectations, only failing to meet them later. But now Plug Power is on the big stage, so it can’t afford to over-promise and under-deliver.

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The Latham, New York-based company’s new full-year guidance is well below the consensus estimate of $123.7 million. The company makes fuel cells for forklifts and material handling vehicles. Last month, the company won a $20 million multi-year contract from SouthernLINC Wireless, which was expected to boost its 2015 revenue. Cowen & Co analyst Jeffrey Osborne said in a research note that Wal-Mart will be the biggest driver of Plug Power’s repeat orders this year. Wal-Mart is Plug Power’s single biggest customer.

Plug Power sees GenDrive gross margins at 29%

The fuel cell company’s sales have increased consistently over the past few quarters, thanks to the rising demand for its GenKey product. But revenue recognition has been a big issue for the company because some clients delayed payments as they looked for third-party financing to buy Plug Power’s fuel cell systems. Cowen & Co has slashed its price target on Plug Power from $6.50 to $4.

Plug Power CEO Andy Marsh said the company expects GenDrive gross margins to increase to 29% by Q4, 2015 due to cost cuts. GenDrive margins stood at 12% in the third-quarter of 2014. According to Darshana Sankararaman of Reuters, GenDrive is expected to generate 50% of Plug Power’s total sales in 2015.

Plug Power shares inched up 2.42% to $2.96 in pre-market trading Thursday.

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