Clear Street downgrades Plug Power (PLUG.US) rating to "neutral": Valuation deemed "too high" after significant increase.

Financial services company Clear Street downgraded Plug Power (PLUG.US) from "buy" to "neutral" on Tuesday. Analysts stated that the reason for this downgrade is that the stock price has risen significantly, leading to an overvaluation. In the past month, Plug Power's stock price surged over 170%, far exceeding the 3% increase of the Russell 2000 index during the same period. Management Changes This rating downgrade comes as Plug Power announced management changes. Andy Marsh, who has been CEO of the hydrogen fuel cell company for nearly 18 years, will step down as CEO in March 2026 and transition to Executive Chairman. The current Chief Revenue Officer, Jose Luis Crespo, will take over as CEO in the spring of next year and will first assume the role of President this week. Analysts pointed out that Crespo's international business experience is a major advantage for the company, but they also warned that the sudden resignation of President Sanjay Shrestha may bring management transition risks. Growth Prospects Clear Street still recognizes Plug Power's long-term growth potential, including its hydrogen applications in various fields: hydrogen supply for refineries, ammonia production, and expansion into the European data center market - where hydrogen infrastructure is more mature than in the United States. However, the institution predicts that Plug Power will not see significant revenue from its data center business until 2026 at the earliest. In terms of revenue forecasts, Clear Street expects the company's revenue to reach $719 million by 2025 and increase to $1.13 billion by 2027, while losses will gradually narrow. Cash Burn and Valuation Despite the pressure on profitability from Plug Power's intensive investment cycle, the Clear Street analyst team, led by Tim Moore, stated that with the slowing pace of factory construction, the company's cash burn is expected to decrease from over $1 billion in 2025 to $491 million. However, the current stock price of Plug Power is around $4, while Clear Street's target price is $3.50. The institution believes that the "current valuation is not ideal" and explains that their target price is based on a 4x enterprise value to sales ratio (EV/Sales), a valuation multiple consistent with Plug Power's average level over the past three years. The report also highlighted multiple risks the company faces, including potential adjustments to clean hydrogen incentives by the new U.S. government, execution challenges in scaling projects, reliance on large customers like Walmart Inc., and long-term financing needs while remaining in a continuous state of losses. Clear Street stated that they still view Plug Power positively in the energy transition, particularly acknowledging their installed base in the material handling sector - this business segment has replaced over 500 megawatts of grid power demand. However, analysts believe that following the recent surge in stock price, the market's short-term optimism towards the company is already fully reflected in the stock price, hence the downgrade in rating is considered reasonable.