- Plug Power shares moved sharply lower after JPMorgan initiated coverage on the stock at Neutral with a $60 price target.
- The move follows a 50-50 joint venture with Renault S.A. (RNLSY) and a $1.5 billion investment commitment from South Korea's SK Group.
- The stock remains in overbought territory despite its downturn, but the intermediate-term trend remains bullish.
JPMorgan analyst Paul Coster believes that Plug Power is a "top pick" within the hydrogen and fuel cell space and could reach $1.2 billion in sales by 2024. Despite the significant potential, the analyst believes that the stock is fully valued at the moment.
Valuation is the analytical process of determining the current (or projected) worth of an asset or a company. There are many techniques used for doing a valuation. An analyst placing a value on a company looks at the business's management, the composition of its capital structure, the prospect of future earnings, and the market value of its assets, among other metrics.
The comments follow a 50-50 joint venture with French automaker Renault to research, manufacture, and sell fuel cell-powered vehicles and hydrogen turnkey solutions over the coming years. Prior to that announcement, Plug Power also announced a $1.5 billion investment commitment from South Korea's SK Group.
From a technical standpoint, Plug Power stock moved off of its all-time highs reached earlier this week following the analyst comments. The relative strength index (RSI) remains significantly overbought with a reading of 82.35, but the moving average convergence divergence (MACD) remains in a strong bullish uptrend. These indicators suggest that the stock could see some consolidation before resuming its uptrend over the coming sessions.
Traders should watch for consolidation above Fibonacci support levels of $63.63 or $57.29. If the stock breaks down further, traders could see a move toward trendline support at around $45.00, although that appears less likely to occur given the bullish fundamentals. If the stock breaks out higher, it could retest prior highs of around $73.87 over the coming sessions.
The Bottom Line
Plug Power shares moved sharply lower after JPMorgan began coverage with a Neutral rating and $60 price target. Analyst Paul Coster called the stock a "top pick" within the hydrogen space but cautioned that the stock is fully valued at current levels. While the stock appears overbought, the intermediate-term trend remains bullish.
The author holds no position in the stock(s) mentioned except through passively managed index funds.