Analysts Diverge On Plug Following Financial Restatement News

Shares of Plug Power (PLUG) are under pressure on Wednesday after the company said it will restate its previously issued financial statements for fiscal years 2018 and 20219 and its quarterly filings for 2019 and 2020. Following the news, Truist analyst Tristan Richardson downgraded the stock to Hold as he expects limited opportunity for near-term outperformance after the disclosures. Still bullish on the name, both Cowen and Roth Capital kept Buy-equivalent ratings on Plug while arguing that the weakness in the shares provides a buying opportunity.

PLUG TO RESTATE FINANCIAL STATEMENTS: 

Plug Power announced that it will restate its previously issued financial statements for fiscal years 2018 and 2019 and its quarterly filings for 2019 and 2020, which will be disclosed in the Form 10-K for the year ended December 31, 2020. In consultation with KPMG, the company's independent registered public accounting firm, management, and the Audit Committee of Plug Power's Board of Directors determined that the company's prior period financial statements need to be restated due to errors in accounting primarily related to several non-cash items, including the reported book value of right of use assets and related finance obligations; loss accruals for certain service contracts; the impairment of certain long-lived assets; and the classification of certain costs, resulting in a decrease in research and development expense and a corresponding increase in cost of revenue.

The revised accounting will change how the company accounts for certain transactions and items but is not expected to impact the company's cash position, business operations or economics of commercial arrangements, Plug stated. The company added that it continues to expect to achieve its previously stated gross billings targets of $475M in 2021, $750M in 2022, and $1.7B in 2024.

MOVING TO THE SIDELINES:

 Truist analyst Tristan Richardson downgraded Plug Power to Hold from Buy with a price target of $42, down from $65, following the company's announcement of likely restatements and the disclosure of weakness in its internal controls. Richardson stated that while he has been generally constructive on Plug Power's fundamental outlook for the long-term, he expects limited opportunity for near-term outperformance following these disclosures. The analyst acknowledged that Plug reiterated long-term targets and the accounting issues appear transitory in nature. However, he sees limited upside until resolution, particularly amid a broader rerating in alternative energy-oriented equities.

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William K. 4 weeks ago Member's comment

THis situation explains the frantic advertising efforts that I have seen for Plug Power.