ITM Power PLC (AIM:ITM) is “not out of the woods” according to analysts at Berenberg, after its latest results highlighted a material downside to estimates for the next 12 months.
As a result, the German bank's analysts reiterated a 'sell' rating on the stock and slashed their target price to 100p from 185p.
The analysts said that ITM's 2023 revenue guidance of £23mln-£28mln was 41% below consensus while underlying earnings (EBITDA) losses were 20% wider than the previous consensus.
Additionally, the analysts noted that the hydrogen energy company delayed and reduced its manufacturing scale-up plans, and is now targeting 1.5GW from its Bessemer Park facility by 2027, as opposed to 5GW by 2024.
They also noted that one of ITM's key partners, Linde, is utilising a different electrolyser supplier for its recently announced 35MW project in the US, which is “potentially diluting the long-term outlook for this joint venture.”
Despite their general optimism in the long-term for hydrogen demand, the Berenberg analysts concluded that ITM faces scale-up challenges, as well as increased competition in the space, reducing its chance of success to 25% from 40%.