• Hydrogen technologies are becoming more widespread
• HSBC analyst recommends buying two industry representatives
• Enormous price potential
Anyone who wants to invest in hydrogen stocks is spoiled for choice. Well-known industry representatives such as NEL, Ballard Power and ITM Power are also vying for investors’ favor, as is the traditional group Linde or the newcomer thyssenkrupp nucera. Samantha Hoh, analyst at HSBC, also sees enormous potential in the hydrogen segment, but has two other favorites from the hydrogen sector in her list of recommendations.
Bloom Energy stock
The first stock that the expert recommends buying is the US company Bloom Energy. The California-based group describes itself as the manufacturer of the “leading solid oxide platform for distributed power generation and hydrogen production that will transform the future of energy.”
In the second quarter of 2023, the company reported a jump in sales from 243.2 to 301.1 million US dollars, but the bottom line was that a loss of 66.1 million US dollars remained on the books. Compared to the previous year, Bloom was able to significantly reduce its loss: in the same period last year, the loss was still at 118.8 million US dollars.
This and in particular Bloom’s strong customer base – after all, Samsung Heavy Industries has been part of the US customer base since 2019 – apparently convinced Samantha Hoh of the company’s potential: “With significant tailwind from the US Inflation Reduction Act (IRA) and that Bipartisan Infrastructure Law (BIL) and a global race for a clean hydrogen economy, Bloom is implementing its multi-year growth strategy, which would consist of international expansion, new market opportunities and the development of new sales channels, the analyst portal TipRanks quotes the expert as saying. Hoh also points to Bloom’s new production facility, which is ready to scale for a hydrogen economy driven by energy security, decarbonization and electrification trends, as well as strong regulatory support.
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Accordingly, the analyst gave Bloom shares a “buy” rating and set the price target at $22. At the current share price of $10.74 (closing price on October 5, 2023), there would be an upside potential of more than 104 percent. With this assessment, Hoh is even below the average price target, which is currently $23.27. The majority of analysts support Hoh’s assessment, and the share is rated positively by the majority of analysts.
Plug Power stock
The second stock on Samantha Hoh’s recommendation list is a well-known market player in the hydrogen business: the US company Plug Power, one of the leading providers in the field of “green hydrogen”. The fuel cell manufacturer also has an extensive customer base, particularly in the material handling industry. This also includes prominent names such as BMW, Walmart and Mercedes.
In the second quarter of 2023, the company recorded enormous growth: Revenues rose from $151.2 million to $260.2 million, but the bottom line was that Plug Power made losses of $236.398 million, which were significantly higher compared to the same quarter last year (US$173.296 million).
Plug has now become the market leader as the largest provider of liquid hydrogen and is active worldwide. One of the biggest arguments for the HSBC analyst to give Plug Power shares a buy rating. She was impressed by the size of the business and the vertical integration of the business, as well as Plug Power’s expansion efforts. “Margins are expected to improve significantly as the company implements its liquid hydrogen ambitions. Capital expenditures will be funded by debt, including a conditional commitment from the DOE’s Loan Programs Office (LPO),” TipRanks quotes the analyst’s note.
Hoh has given Plug Power shares a price target of eleven US dollars, which would correspond to an upside potential of 71.9 percent at the current share price of US $6.40 (closing price on October 5, 2023). Hoh is still cautiously positive among her analyst colleagues, as the average price target for Plug Power shares is $17.97, which is 180.8 percent above the current share value.
Also negative comments on the hydrogen market
But not all experts see hydrogen stocks as having future potential. Barry Norris, founder and CEO of the British hedge fund Argonaut Capital Partners, recently announced his skepticism for the industry and sees little chance of worthwhile investments in the sector, at least in the short term. “Unfortunately, it’s a complete waste of time,” Norris said in an interview, according to Bloomberg, where he expressed doubts about the business models of many industry representatives in particular. Norris continued that he had even built “a few hydrogen shorts” himself.
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