Gore Street and Gresham House have been given encouraging write-ups by Canadian bank RBC, which has just started coverage of the battery storage sub-sector.
Gresham House shares languish close to all-time lows due to a weak revenue environment, construction delays and a cancelled dividend.
However, says RBC, revenues partially recovered in March and assets are now cash-generative.
“Reforms to the Balancing Mechanism in the current half year should support further revenue recovery, while asset upgrades mean GRID is well positioned to benefit from an evolving revenue stack.”
Outperform (spec risk) with a 75p price target in the investment view.
Gore Street Energy Storage (Sector Perform, PT 85p) owns the most geographically diversified battery portfolio and is an attractive solution to a weak GB market, notes the bank.
A stable balance sheet and near-term operational capacity growth further derisk the outlook.
However, the portfolio remains ~40% GB-based, and crucially we expect revenue from GSF's low-duration GB assets to increasingly lag longer-duration peers going forward.