Plug Power Stock Forecast: Inflation Reduction Act excitement lifts PLUG ahead of earnings

It is not every day that a company's stock price increases heading into earnings that have been revised down across the board. That is the case with Plug Power (PLUG) however. The hydrogen-power company rose nearly 20% last week and just under 56% in the past month due to euphoria regarding clean energy legislation being taken up and passing the Senate on Sunday.

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Plug Power earnings: Inflation Reduction Act triggers euphoria

Wall Street consensus expects PLUG to deliver $-0.20 in adjusted earnings per share on revenue of $164 million. This compares to adjusted EPS of $-0.27 on $141 mllion in sales during the first quarter. Plug Power does not have a good track record for earnings beats by any measure, and analysts have noticed. All 17 EPS revisions in the past 90 days for Q2 were downward revisions. There was not a single upward revision. PLUG has actually missed seven EPS forecasts in a row, which calls for some kind of trophy at this point.

Just do not tell the market this. At the moment in Monday's premarket, PLUG has advanced another 5.6% to $26.60. Much of the euphoria surrounds the US Sentate's passing of the Inflation Reduction Act, which should greatly benefit PLUG and other companies like FuelCell Energy (FCEL). The clean energy and tax bill gives hydrogen producers as much as $3 in tax credits for each kilogram of green hydrogen produced. This is expected to do wonders for Plug Power since it stands as one of the major green hydrogen producers and builders of hydrogen-producing electrolyzers. 

For the coming quarterly release, investors will look for more color on the contract announced last week with New Fortress Energy. This agreement calls for a 120-megawatt green hydrogen plant near Beaumont, Texas.

"Expected to be one of the largest of its kind in North America, the facility will leverage Plug’s industry-leading proton exchange membrane (PEM) electrolysis technology and enable the production of more than 50 tons per day (TPD) of green hydrogen," Plug Power said in a statement. "With the development of additional supporting infrastructure, the facility will be scalable to nearly 500 megawatts."

Plug Power stock forecast: Next bullish target at $28

Plug Power stock has been riding an ascending lower trend line for support for the past two months like much of the market. The past two weeks, however, have seen PLUG begin to soar. With shares breaking through the $23 resistance level that held up since late April and early May, the next target is $28. That level is the right shoulder of a head-and-shoulders pattern appearing in March and April.

Some support should be found at the 9-day moving average, which is currently running near $21.54. The Moving Average Convergence Divergence (MACD) forecasts a steady move higher.

PLUG daily chart