Why Plug Power Inc. Shares Pulled Back

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Plug Power  sank 2% on Friday after Roth downgraded the alternative energy technologist from buy to neutral.

So what: Along with the downgrade, analyst Philip Shen reiterated his price target of $8, exactly where the stock closed yesterday. While momentum traders might be attracted to the stock's big run in recent weeks, Shen's call suggests growing sentiment on Wall Street that Plug Power's valuation is a bit stretched at the moment.


Now what: According to Roth, Plug Power's risk/reward trade-off is pretty balanced at this point. "While we are encouraged by PLUG's production capacity of ~2,500 units per quarter, we believe infrastructure risk could put some shipments at risk of delay," said Shen. "Management indicated that ~25 percent of the 3k units of expected 2014 shipments are destined for sites with hydrogen infrastructure already in place. This leaves nearly 2,250 units (or 75 percent of expected 2014 shipments) subject to delay if infrastructure installs take longer than planned." When you couple those seemingly real risks with Plug Power's red-hot stock price, it's tough to disagree with Roth's cautious stance.

More compelling ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Why Plug Power Inc. Shares Pulled Back originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

What Is Your Risk Tolerance?

Answer the question "What type of investor am I?".

View Course »

Small Cap Investing

Learn now to invest in small companies the right way.

View Course »

Add a Comment

*0 / 3000 Character Maximum