Is Ballard Power stock a buy? (September, 2024)

Stay on the sidelines with this one.

That’s the advice from Roth MKM analyst Craig Irwin, who reviewed Ballard Power (Ballard Power Stock Quote, Chart, News, Analysts, Financials NASDAQ:BLDP) following a move to cut its expenses.

On September 12, Ballard announced a corporate restructuring aimed at reducing spending.

“As discussed during our recent earnings call, in the context of a challenging macroeconomic and geopolitical outlook and amid protracted policy uncertainty, we see a multi-year push-out of the availability of low-cost, low carbon hydrogen and hydrogen refueling infrastructure. As this delay represents a significant headwind to our corporate growth plan, we are implementing a cost restructuring to moderate our investment intensity and pacing to better align with delayed market adoption,” said CEO Randy MacEwen. “We expect our restructuring measures to impact our global operations, yielding annualized total operating expense savings in excess of 30%, with a substantial part of the annualized savings being realized in 2025.”

The analyst weighed in on the news.

“We believe this restructuring implies Ballard is unlikely to capture the customer orders necessary to drive the previously expected 4Q24 revenue and gross margin improvement,” he wrote. “Ballard initiated a 30% reduction in OpEx but cash costs remain undisclosed. Cash burn in 2024 likely remains around ($150m) given cash restructuring costs offset by any 4Q24 savings, but these actions should bring the cash burn down to roughly ($100m) in 2025 assuming ($30m)-($35m) in CAPEX.”

In a research update to clients September 13, Irwin maintained his “Neutral” rating and lowered his price target from $2.00 to $1.75.

The analyst thinks the company will post an EBITDA loss of $140.1-million on revenue of $85.0-million in fiscal 2024. He expects those numbers will improve to an EBITDA loss of $72.5-million on revenue of $95.0-million in fiscal 2025.