A leading broker has cut its target price on Ceres Power but kept its Buy rating, saying the current valuation presents a chance for long-term investors willing to look beyond short-term setbacks.
Peel Hunt has lowered its target price on Ceres Power Holdings PLC (LSE:CWR, OTC:CPWHF) from 550p to 120p, but maintained its 'buy' recommendation, describing the current valuation as depressed and underlining confidence in the company’s ability to reach free cash flow neutrality.
The broker said the end of Ceres’s relationship with Bosch does not alter the long-term potential of the solid-oxide fuel cell market.
It viewed the termination as creating an opportunity for the company to form new partnerships and continue progressing commercially.
Peel Hunt noted a record £112.8mn in order intake for 2024 and said it expects the first power system products to launch through Doosan in late 2025.
It identified this milestone as a key catalyst for valuation reassessment in the coming year.
The firm’s revised valuation is based on a higher weighted average cost of capital, which it raised to 16% from 10.6%.
The increase reflects a higher risk-free rate, a larger market risk premium, and a sharp upward revision to the company’s beta.
Despite the target price cut, Peel Hunt said Ceres remains sufficiently funded and continues to exercise prudent capital discipline.
In afternoon trading, the stock was down 6% at 58.55p.