Ballard Power has price target chopped at Citi

Ahead of the company’s upcoming quarterly results, Citi analyst Vikram Bagri has cut his price target on Ballard Power (Ballard Power Stock Quote, Chart, News, Analysts, Financials NASDAQ:BLDP).

As reported by the Globe and Mail, Bagri February 27 maintained his “Neutral” rating but cut his one-year price target on BLDP from (US) $4.50 to $3.50.

The analyst says BLDP shareholders are going to require a lot of patience.

“We like BLDP’s strategy of targeting the truck and bus market in Europe, California, and China,” he concluded. “However, we think growth and profitability are likely back-end loaded. Furthermore, the company is reliant on the build-out of hydrogen delivery infrastructure.”

Bagri outlined what he expects from the company’s fourth quarter results, which are due March 11.

“Sequential revenue growth this quarter should be driven by stationary, bus, and truck applications, partially offset by weaker rail shipments,” the analyst wrote. “We are comfortable with our above-consensus revenue forecast as it implies a 1.7 times conversion rate on the NTM [next 12-month] order book ($72.7-million as of 3Q23). This is higher than the historical average of more than 1.3 times but only slightly above >1.5x conversion achieved recently. BLDP has historically indicated that GM may break even above $150-$160-million in run-rate revenues. As our 4Q23 estimate implies an annualized run-rate in this range, BLDP could report breakeven GM this quarter, excluding one-time items such as inventory writedowns. Sustained revenue momentum in 2024, if achieved, could pull forward breakeven GM, currently expected starting early 2025.”