Did Amazon’s Plug Power Deal Put Fuel Cells Back on the Map?

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Fuel cell companies made solid gains on Wednesday after Plug Power Inc. (NASDAQ: PLUG) announced a huge deal with Amazon.com Inc. (NASDAQ: AMZN). Seeing such a broad response to only a two-company deal begs the question of whether fuel cell companies are coming back in style.

What’s important to note in this situation is that companies across this industry rallied, seemingly giving this technology more credence. Hydrogen fuel cells and alternative energy in general is somewhat of a hard sell compared to traditional energy sources, but with a major player like Amazon buying into it, confidence in these stocks is way up.

The fuel cell industry has been relatively weak over the past few years, without any significant growth. However this Amazon deal could act as a catalyst and draw more business to this industry in general.

According to the deal, Amazon will use Plug Power fuel cells and hydrogen technology in its fulfillment network. At select fulfillment center locations, Amazon will begin powering its industrial equipment, such as forklifts, using the GenKey technology, which will enable faster charging times, reduce costs and support energy-efficiency in Amazon’s fulfillment operations. Revenues associated with the commercial agreements are expected to be around $70 million in 2017.

Apart from the deal to use Plug Power’s technology in the fulfillment network, Amazon and Plug Power will begin working together on technology collaboration, exploring the expansion of applications for Plug Power’s line of ProGen fuel cell engines.

A few analysts have weighed in on Plug Power:

  • FBR has an Outperform rating and raised its price target to $3 from $2.50 on April 6.
  • Rodman & Renshaw has a Buy rating and raised its price target to $4 from $3 on April 6.
  • Cowen reiterated an Outperform rating and raised its price target to $3 from $1.75 on April 6.

Plug Power shares were trading down 8.2% at $2.06 on Thursday, with a 52-week trading range of $0.83 to $2.40 and a consensus analyst price target of $2.18.

Shares of Amazon were down 0.9% at $900.56. The stock has a 52-week range of $589.00 to $923.72 and a consensus price target of $961.14.

24/7 Wall St. has taken a look at a few other companies in the industry that saw gains from this deal and have skin in the game.

Shares of Ballard Power Systems Inc. (NASDAQ: BLDP) were last seen up 7.2% at $2.55, with a consensus analyst target of $3.00 and a 52-week range of $1.23 to $2.61.

FuelCell Energy Inc. (NASDAQ: FCEL) traded up nearly 7% at $1.55. The consensus price target is $3.00, and the 52-week range is $1.25 to $8.88.

Hydrogenics Corp. (NASDAQ: HYGS) shares were up about 1% at $7.17, with a consensus price target of $9.50 and a 52-week range of $3.90 to $10.33.