Plug Power soars on tax-incentive news
Guidance on a lucrative tax incentive created by the Biden administration’s Inflation Reduction Act sent Plug Power soaring on Monday.
Shares of Plug Power rocketed higher on Monday after analysts at JPMorgan said the company stood to benefit from recent guidance from the Treasury Department about a lucrative hydrogen-related tax credit.
Essentially, the idea is that the final federal-government guidance on how these tax breaks — known as 45V — can be used might boost investment in cleaner ways to produce hydrogen, which could help in meeting climate-change goals.
Currently, hydrogen is primarily harvested from natural gas in a process that produces large carbon-dioxide emissions. (It’s possible to produce it without such emissions, but it’s expensive, which is why government incentives are required.)
Plug Power makes a piece of equipment called electrolyzers that split water into hydrogen and oxygen and are important parts of clean hydrogen production.
In a note published on Monday, JPMorgan analysts said that additional US hydrogen investment could boost domestic sales of Plug Power’s electrolyzers, most of which are sold in Europe and Australia.
“Positive 45V guidance revisions will primarily help the electrolyzer side of the business, though upside has not been baked into the 2025 revenue guidance; rather revenue growth will be driven by what is already in the backlog and international opportunities, with only a few hundreds of MWs of 2025 electrolyzer deals linked specifically to the US.”
JPMorgan analysts also included a word of caution, adding that “while the final guidance being released is certainly positive in our view, we think some investors may still harbor concerns around the implementation of the credit which will largely fall to the incoming Trump administration.”
If there are concerns, it’s hard to find them in the stock market today, as the stock is up more than 20%.
