With 4Q21 earnings season kicking off, RBC’s Jospeh Spak believes the quarter’s results will take a back seat to 2022 guidance. And the analyst thinks companies are likely to provide “fairly prudent” outlooks.

Looking at the case of Plug Power (PLUG), this is evidently true; compared to Spak’s revenue forecast, the company is taking the safe route.

The hydrogen specialist’s preliminary 2022 revenue guide has called for sales between $900-$925 million – broken down to $600 million for material handling, $150 million in electrolyzers, $75 million new markets and $100 million acquisition benefit – although the company did say strong electrolyzer demand could provide some upside.

Spak’s estimate is higher – at $986 million, which is also way above the Street’s forecast of $911 million. That said, on the other side of the coin, Spak’s EBITDA estimate stands at ($76 million) vs. consensus at ($10 million), a figure which appears “wildly optimistic,” according to Spak.

2022 should also see some major investments, which Spak believes positions the company for “meaningful margin expansion and revenue growth” over the longer-term. These include: “1) Hydrogen plant expansions 2) Site retrofits and system power and software improvements that will improve reliability of fuel cell systems and reduce costs to service and 3) Applied Cryo Tech and Frames Group acquisitions add $100mm of revenues.”

As for 4Q21, the key, says the analyst, will be the top-line figure; Spak has revenue hitting $161 million, above Wall Street’s $156 million forecast, with Spak’s figure suggesting gross billings for the year will reach $500 million, the number PLUG was aiming for.

Investors will also be keen to see if there is any impact from elevated fuel, service & products costs. The company has indicated heightened freight, material and labor related costs are expected to remain. Spak expects these to abate somewhat as 2022 progresses.

All in all, ahead of the print, Spak rates PLUG shares an Outperform (i.e. Buy) along with a $43 price target. This target brings the upside potential to ~88%. (To watch Spak’s track record, click here)

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The rest of the Street supports Spak's thesis. In fact, the average price target is even more upbeat; at $47.80, the figure is expected to yield 12-month returns of ~109%. The stock boasts a Strong Buy consensus rating, based on 12 Buys and 3 Holds. (See PLUG stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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