Plug Power plunges after Morgan Stanley cut; Bloom Energy top clean tech pick
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Plug Power (NASDAQ:PLUG) -6.8% and First Solar (NASDAQ:FSLR) -3.7% in Monday's trading after Morgan Stanley downgraded both stocks to Equal Weight from Overweight with respective $15 and $194 price targets, even while saying it remains constructive on overall long-term growth in renewables.
Morgan Stanley analyst Andrew Percoco said he likes Plug's (PLUG) plan to vertically integrate its green hydrogen ecosystem but is more cautious on the pace of revenue growth and margin improvement, with potential near-term financing risks given the continued elevated levels of cash burn.
On First Solar (FSLR), the stock has nearly tripled since the Inflation Reduction Act was announced, but this now prices in the IRA's significant benefits, and the company now faces the risk of increased competition as competitors expand in the U.S. given the very supportive $0.17/watt potential subsidy level available to panel manufacturers.
Bloom Energy (NYSE:BE) is Percoco's top pick in clean tech, viewed as a "key beneficiary" of the growing value proposition of distributed energy, rising grid instability, grid capacity limitations, and the $3/kg clean hydrogen tax credit included in the IRA.
Morgan Stanley also initiated Sunnova Energy (NOVA) at Overweight, citing exposure to a "vastly under-penetrated" residential rooftop solar installer market with strong long-term growth prospects, and Enphase Energy (ENPH) at Equal Weight.
Bloom Energy (BE) boasts a "stellar growth strategy," expanding its footprint in the U.S. and internationally into hydrogen, CCUS, biogas and marine, Simple Investing writes in an analysis published recently on Seeking Alpha.