Shares of Plug Power Inc. (PLUG) fell more than 5% during Thursday’s session after JPMorgan began hedging with a neutral rating and a price target of $60.00 per share.
Key points to remember
- Plug Power shares fell sharply after JPMorgan initiated a hedge on the stock at Neutral with a price target of $60.
- This decision follows a 50-50 joint venture with Renault SA (RNLSY) and a $1.5 billion investment commitment from the South Korean group SK.
- The stock remains in overbought territory despite its decline, but the medium-term trend remains bullish.
JPMorgan analyst Paul Coster believes Plug Power is a “top pick” in hydrogen and fuel cells and could hit $1.2 billion in sales by 2024. Despite the potential importantly, the analyst believes the stock is fully priced at this time.
Point
Evaluation is the analytical process of determining the current (or projected) value of an asset or business. There are many techniques used to do an assessment. An analyst who assigns a value to a company looks at the direction of the company, the composition of its capital structure, prospects for future earnings, and the market value of its assets, among other measures.
The comments follow a 50-50 joint venture with French automaker Renault to research, manufacture and sell fuel cell vehicles and turnkey hydrogen solutions over the next few years. Prior to this announcement, Plug Power also announced a $1.5 billion investment commitment from South Korea’s SK Group.
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From a technical standpoint, Plug Power stock has retreated from its all-time highs reached earlier this week on analysts’ comments. The Relative Strength Index (RSI) remains significantly overbought with a reading of 82.35, but the Moving Average Convergence Divergence (MACD) remains in a strong uptrend. These indicators suggest that the stock may experience some consolidation before resuming its uptrend over the next few sessions.
Traders should watch for consolidation above the Fibonacci support levels of $63.63 or $57.29. If the stock falls further, traders could see a move towards trendline support at around $45.00, although that seems less likely to happen given the bullish fundamentals. If the stock explodes higher, it could retest past highs of around $73.87 in the coming sessions.
The essential
Plug Power shares fell sharply after JPMorgan began hedging with a neutral rating and a price target of $60. Analyst Paul Coster called the stock a “top pick” in the hydrogen space, but warned the stock was fully valued at current levels. Although the stock looks overbought, the medium-term trend remains bullish.
The author does not hold any positions in the stocks mentioned, except through passively managed index funds.