ITM Power PLC (AIM:ITM), the hydrogen fuel cell and electrolyser manufacturer, has seen its price target cut by RBC Capital from 500p to 260p.
The investment bank cited new delivery assumptions as the reason for the cut but also noted the company's potential for order pick-up in 2023.
Despite recent changes to ITM's electrolyser capacity plans, including limiting its UK capacity to Bessemer Park and setting 70% of its longer-term capacity target outside the UK, the company remains the second-largest manufacturer across Europe and North America.
In December 2022, ITM Power appointed Dennis Schulz as its new chief executive, replacing the long-serving Graham Cooley.
RBC said it expects Schulz to address the markets on 31 January 2023 with a 12-month strategic plan, which will likely include updates on the expansion of the Bessemer Park facility in Sheffield, the firm's longer-term goal of 5GW and the location of the next factory.
Additionally, the bank said it anticipates more information on the simplification of ITM's product portfolio and the impact on the commercial pipeline, specifically with regard to the company's partnership with Linde.
Despite the cut in price target, RBC maintained its ‘outperform’ rating for ITM Power, noting that new market dynamics significantly strengthen the case for green hydrogen and electrolyser manufacturers such as ITM.
The bank also said that, while there remain uncertainties related to the timing of large purchase orders and ramp-up costs potentially affecting near-term profitability, the potential for order pick-up in 2023, along with the company's position as a leading player in the hydrogen fuel cell and electrolyser market, make it a strong investment opportunity.
The shares, down 74% in the last year, fell 3.2% in morning trade to 88.38p. At their peak, they were worth almost 700p each.