Plug Power lowered at TD on electrolyzer, material handling concerns

Investing.com -- TD Securities downgraded Plug Power to Hold from Buy and cut its price target to $2 from $4, citing growing uncertainty around demand and execution risks across the company’s core end markets.

The downgrade reflects concerns that the ramp-up in electrolyzers and material handling is taking longer to materialize than previously expected.

The broker said it has been “on the wrong side of the PLUG trade for some time” and now sees it as prudent to move to the sidelines while monitoring execution, even as it still expects progress on gross margin improvement in 2026 and potential EBITDA breakeven in 2027.

A key issue flagged in the note is the lack of clarity around Plug Power’s path to positive free cash flow.

Management previously indicated that quarterly revenue of $215 million would be needed to reach gross margin breakeven and $300 million to turn EBITDA positive, targets that imply roughly 40% year-on-year revenue growth.

Plug Power expects around two-thirds of 2026 revenue to come in the second half, which implies continued pressure on margins in the first half of the year due to high operating leverage.

TD also highlighted recent financing actions and corporate governance steps as signals that free cash flow breakeven is not imminent.

Despite a recent deal to monetize electricity rights and a recent convertible offering, Plug Power has called a special shareholder meeting to seek approval to double authorized common shares.

The company noted that management has indicated it would pursue a reverse stock split if the proposal is not approved, which TD sees as “likely a negative for shares.”

Demand trends in electrolyzers were another area of concern. TD said domestic demand is slowing and questioned how much of a role the hydrogen economy will play in the U.S. under the current electricity pricing environment.

This shifts the focus to Europe and Australia, though visibility remains limited as few recent projects have reached final investment decision.

Material handling demand is also flagged as a risk. Unit sales declined year on year in the first nine months of 2025, a slowdown TD said is consistent with broader market challenges.

“We will monitor Plug’s ability to renew and add sites for large U.S. customers (Amazon, Walmart, and Home Depot) to its fleet (roughly 275 locations). Recall, that every new site is approximately $10mn in revenue realized over 5 years across fuel cells, service, and hydrogen fuel,” the bank wrote.

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