Plug Power, Inc. PLUG shares fell sharply on Tuesday after the company reported mixed first-quarter results and suggested margin pressure continuing in the near term.

An analyst at KeyBanc Capital Markets weighed in on the quarterly performance and the outlook going forward.

The Plug Power Analyst: Sangita Jain maintained a Sector Weight rating.

The Plug Power Thesis: The negative stock reaction was due to Plug Power posting low-end guidance for revenue and gross margin, Jain said in a note. As opposed to the previous single-figure guidance of $1.4 billion in revenue and about 10% gross margin, the company announced a low-end guidance of $1.2 billion and about 4%, respectively, she said.

The analyst noted that the management is exploring multiple financing options, including a loan from the Department of Energy, asset-backed loans and potentially a partnership with infrastructure funds.

More clarity on the DOE loan could be received in the second half and asset-backed loans may follow once the Georgia plant is at full production and possibly once the Los Angeles plant is fully commissioned, she added.

The momentum for electrolyzer sales opportunity is real, Jain said. As Plug Power builds an entire supply chain for clean hydrogen delivery, the process is not without challenges, the analyst said.

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The analyst listed the following as upcoming catalysts:

"We believe that PLUG is sitting at the cusp of significant revenue and margin expansion, and 2023 could be the year when the series of capacity expansions and investments start to bear fruit," Jain said.

The analyst, however, said she preferred to stay on the sidelines until a quarter or two, of positive inflection is seen.

Plug Power Price Action: Plug Power stock slumped 13.83% to $8.01 on Tuesday, according to Benzinga Pro data.

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