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Plug Power Inc Earnings Disappoint; Cowen Remains Bullish

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Plug Power Inc (NASDAQ:PLUG) shares plunged 10.38% on Thursday to $0.95 after the company reported its fiscal fourth-quarter and full year results. The fuel cell maker is still struggling to achieve a profitable bottom line. For the full-year 2016, the company posted a net loss of $57.3 million on revenues of $85 million. Plug Power was previously hoping to break even by the end of 2016 and turn profitable by FY2017. The profitability goal has now been pushed back to mid-2018.

Plug Power spent $21.2 million on R&D last year

Plug Power’s business suffered a setback due to the expiration of tax credits. The company posted a gross profit of $3.9 million compared to a loss of $10 million in 2015. The fuel cell manufacturer has been investing heavily in research and development. R&D expenses stood at $21.2 million in 2016 as it tries to expand its business beyond material handling. It forecasts a similar R&D spending in 2017.

For 2017, Plug Power forecasts revenues of $130 million, up more than 50% from 2016. Chief executive Andy Marsh told investors that business in the current year would be driven by progress in developing fuel cells, and cost reduction through automation. About 80% of the company’s revenue still comes from fuel cells used to power industrial forklifts.

Cowen & Co maintains Outperform rating on the stock

For the December quarter, the company posted a loss of $19.2 million or 11 cents per share. The losses came in at 8 cents a share after adjusting for non-recurring costs. Analysts surveyed by Zacks Investment Research were expecting a loss of 6 cents per share. Its Q4 revenues stood at $32.6 million, missing the Wall Street expectations of $34.8 million.

After Plug Power’s earnings announcement, Cowen & Co analyst Jeffrey Osborne reiterated his Outperform rating on the stock with $1.75 price target. Osborne said the company’s fourth-quarter results were in-line with its February pre-announcement. The analyst added that improved PPA financing could improve Plug’s balance sheet. Cowen & Co is encouraged by the company’s progress in China as well as continued penetration into material handling end markets.

Focus on China, new growth opportunities

In November last year, the Latham, New York company signed deals with two Chinese companies to develop industrial electric vehicles. The electric vehicles will be powered by Plug’s hybrid fuel cell engine system. China is expected to become the world’s largest fuel cell market in the next couple of years. The Chinese government has pledged to invest $100 billion in alternative technologies by 2030.

Andy Marsh said in a statement that the fuel cell maker has set “aggressive, yet obtainable” goals for 2017. Plug Power aims to capitalize on the rising demand for vehicle electrification, which would eventually translate into “meaningful shareholder value.” The company is also testing fuel cell-powered delivery trucks in collaboration with FedEx.

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