What happened
The tech-heavy Nasdaq bounced back this morning, after officially hitting a "correction" point -- a 10% top-to-bottom sell-off -- yesterday. Green energy stocks are among today's bigger winners, with fuel cell leaders Plug Power (PLUG 1.11%) and Bloom Energy (BE -0.81%) gaining 8.6% and 6%, respectively.
Also moving higher is solar panel microinverter maker Enphase Energy (ENPH 1.43%), scoring a 5.1% gain as of 10:10 a.m. ET.
Image source: Getty Images.
So what
And yet, most of the news in renewable energy today is bad news. This morning, you can't throw a rock on Wall Street without hitting one banker or another that is cutting price targets on renewable energy stocks.
On Enphase for example, megabanker J.P. Morgan just slashed its price target on the solar leader by 15%, to $246 per share, citing "challenging supply chain issues, geopolitical tensions, and an [unchanged] U.S. Investment Tax Credit over 2021 and 2022 [which] will likely result in some utility-scale projects being delayed," reports TheFly.com. J.P. Morgan further complains that changing solar regulation in California gives it only "limited" visibility into how well Enphase might do in the near term.
Likewise on Bloom, J.P. Morgan is lowering expectations -- cutting its price target 16% to $32 a share, warning of near-term volatility.
Plug Power is catching the most flak today, however. According to TheFly's latest tally, no fewer than three separate analysts -- RBC Capital, Wells Fargo, and Canaccord Genuity -- are responding to Plug's 2022 revenue forecast yesterday with lowered price targets.
Canaccord is particularly pessimistic with a price target of $25, warning of execution risks as Plug attempts to grow its revenue stream from $31 million over the last 12 months to $900 million over the next 12 months. Wells Fargo added that Plug's free cash flow could underperform, and that investors won't be willing to pay up for profitless stocks in an era of inflation and rising interest rates.
Now what
And yet, amid all this doom and gloom, one stock market analyst rating stands out: Morgan Stanley's.
In its own note on Plug Power this morning, Morgan Stanley broke from the herd to declare the sell-off of Plug Power stock is overdone. Noting that Plug reaffirmed its guidance for both 2022 and 2025 revenue, Morgan Stanley highlighted the potential for lower operating and capital costs from past acquisitions, and future acquisitions in liquefaction technology, to boost revenue and profits alike -- forecasting as much as $250 million in extra annual revenue for Plug "longer-term," reported StreetInsider.com today.
Morgan Stanley reiterated its own overweight rating on Plug stock and its price target of $65, which is roughly twice what everyone else is expecting. For that matter, even one of the analysts who cut price targets on Plug today -- RBC -- still considers the stock a buy with as much as 70% upside. (And the other two analysts, Canaccord and Wells Fargo, see the stock as no worse than fairly priced.) Similarly, J.P. Morgan, despite cutting its targets on Bloom and Enphase, believes both those stocks remain undervalued despite all the uncertainties, and recommends buying them.
So long story short, why are green energy stocks going up on bad news today? Because despite cutting price targets, these analysts by and large consider green energy stocks a bargain -- just not as big of a bargain as they thought yesterday.
