Panmure Liberum has upgraded Ceres Power Holdings PLC (LSE:CWR, OTC:CPWHF) to a 'buy' and stuck with a punchy target price of 420p after a sharp sell-off in the shares.
The broker says the 28% fall since last month has swung the risk-reward back in favour of buyers. The shares rose 2% to 280.45p.
The note is a direct response to a short report from Grizzly Research, which questioned the size of the market opportunity, the suitability of solid oxide fuel cell technology for data centres and the logic of Ceres’ licensing model. Panmure Liberum says these concerns are already well known and overstated.
A key focus of the short case is the Doosan partnership and the lack of near-term royalty income. Panmure Liberum agrees that royalties will be modest in the early years.
But it says this is fully in line with management guidance and current expectations. Doosan has only just completed its first 50MW factory and is still using an older version of the Ceres stack, with a major upgrade due in 2026.
Crucially, Panmure Liberum argues the valuation does not depend on near-term royalties. Instead, it rests on Ceres signing new licence partners and building long-term exposure to large end markets.
Licence fees remain the main revenue driver this decade. Royalties matter later.
The broker also pushes back on claims that fuel cells are unsuitable for data centres. It accepts the technology is still maturing, but points to strong demand for on-site power, fuel flexibility and high efficiency.
It highlights the progress made by Bloom Energy, a direct competitor, which has deployed more than 1.3GW and recently signed multi-billion dollar agreements with utilities, infrastructure investors and hyperscale customers.
On the business model, Panmure Liberum says the challenges of licensing complex technology are well understood. Sales cycles are long and the pool of potential partners is limited.
Even so, Ceres has already signed several high-quality partners that are moving towards commercial production. The broker believes the size of the market, particularly in the US, is large enough to support multiple manufacturers using the same core technology.
Panmure Liberum’s valuation is based on a discounted cash flow model that assumes steady progress by existing partners, one new licence partner a year and royalties of $75 per kilowatt over time.
On this basis, it arrives at an equity value of about £816 million, equivalent to 420p a share.