Ceres Power Holdings PLC (AIM:CWR, OTC:CPWHF) was highlighted as a ‘buy’ as analysts at Berenberg assessed the ‘rollercoaster’ hydrogen sector.
Analyst James Carmichael called Wednesday’s partnership news from Ceres, with Weichai Power and Bosch, as the sector’s most significant news for 2022 whilst repeating a 1,560p price target (current price: 568p) for the London listed share.
Carmichael said that the team up increases confidence in the long-term investment thesis for Ceres.
“As only heads of terms have been signed so far, explicit information on the scale and timing of the JV is fairly limited. Hence we look for clarity on this and potentially any statement from Bosch or Weichai around their longer-term ambitions,” Berenberg said.
The analyst also said it expects newsflow from other partnerships – the analyst highlighted that Doosan, for example, recently announced a £89mln investment for a 79,200sqm manufacturing plant that will manufacture Ceres’s technology. Carmichael noted, for context, that the plant would be 6 times larger than ITM Power’s factory at Bessemer Park.
ITM is rated by Berenberg as a ‘sell’ with a downgraded price target of 225p down from 300p (current price: 254p).
The European bank’s analyst team said ITM needed to show it can deliver current consensus revenue expectations without also seeing any major step-up in balance sheet provisions. If the company can, Berenberg’s analysts say they would have more confidence in the mid-term story.
Recapping the sector’s recent performance, Berenberg said: “2021 was a year of disappointment for the hydrogen sector generally, and the pure-play names in our coverage. Order intake was slow and quarterly revenue misses became a theme. Earnings disappointments have continued in early 2022.
“However, we are more optimistic for 2022.”