Plug Power Inc: Will 2016 Be A Transformational Year?

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Plug Power shares have declined more than 30% in 2015. While the company won several deals with giants like Wal-Mart, Home Depot, Kroger, Colruyt, and 3M, these catalysts were not enough to hold the stock above $3. The fuel cell company had a history of over-promising and under-delivering. So, it came as a big surprise when Plug Power slashed its FY2015 revenue forecast from $130 million to $100 million.

Plug Power to keep losing

For the fourth quarter of 2015, analysts expect the Latham, New York-based company to report $35.37 million in revenue with a net loss of 5 cents per share. The FY2015 revenue is expected to come in at $100.63 million, up 56.70% from last year and in-line with the company’s guidance. Wall Street expects Plug’s FY2016 revenue to surge 49.70% YoY to $150.66 million. Losses are also expected to narrow from 25 cents to 17 cents a share.

Analysts expect its annual bookings to surpass $300 million in 2016. But a major issue with Plug Power is that the company has never generated an annual profit since its inception in 1997. Plug Power CEO Andy Marsh said earlier this year that he was expecting the company to become profitable in 2016. Wall Street expects it to keep losing money through the next year.

Fuel cell FTC extension to benefit Plug Power

Plug Power’s entry into automobiles and impact of the Federal Tax Credit (FTC) could prove wild cards for 2016. The fuel cell FTC was not part of the omnibus that included the wind and solar credits. Now a bill is likely to pass in January 2016 that will extend the fuel cell credit from 2016 through 2021, says Seeking Alpha contributor Matt Margolis.

Once written into law, the fuel cell FTC will allow a 30% credit between 2017 and 2019, 26% credit in 2020, and 22% credit in 2021. The FTC extension will help Plug Power win more customers. Plug Power chief executive Andy Marsh aims to make it a $500 million company in terms of revenue within five years. The company will have to maintain a near 50% growth rate through 2019 to achieve that target.

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