By Sam Boughedda
Morgan Stanley analysts downgraded Plug Power (NASDAQ:PLUG) to Equal-weight from Overweight and First Solar (NASDAQ:FSLR) to Underweight from Equal-weight in a note to clients Monday.
In the note on clean tech, they told investors that while they remain constructive on long-term renewables growth, "near-term risks are elevated" for several clean tech stocks.
PLUG's price target was cut to $15 from $35 per share, with the analysts explaining that while they continue to like the company's strategy to vertically integrate the green hydrogen ecosystem, several quarters of execution issues have made them more cautious about the pace of the company's revenue growth and margin improvement.
As a result, Morgan Stanley sees potential near-term financing risks, given the continued elevated levels of cash burn.
Meanwhile, the analysts raised the firm's price target on FSLR to $200 from $194. They described the company as one of the biggest direct beneficiaries of the IRA, which they estimate is worth ~$83/shr. However, they note that the stock has appreciated 196% since the IRA was announced, outperforming the rest of Morgan Stanley's clean tech coverage, and the firm now believes the stock "already prices in the significant benefits of the IRA."
"Going forward, we see risk of increased competition as domestic and international competitors expand in the US given the very supportive $0.17/W potential subsidy level available to panel manufacturers, which in our view, will likely drive down the long-term earnings profile of the company," they wrote.