Is Ballard Power a buy?

Ballard Power’s (Ballard Power Stock Quote, Chart, News, Analysts, Financials NASDAQ:BLDP) disappointing Q1 2025 results prompted Roth Capital Partners analyst Craig Irwin to reaffirm his $1.25 price target and “Neutral” rating, highlighting the company’s continued cash burn, lack of new bookings and limited visibility on a path to profitability.

However, he credited Ballard with maintaining tight expense controls and making headway in its cost-reduction efforts.

Irwin noted the company reported revenue of $15.4-million and an adjusted EBITDA loss of $27.5-million, missing his forecast of $17.5 million in revenue but beating his $28.2-million EBITDA loss estimate.

“BLDP reported weak 1Q25 revenue balanced by tight expense controls,” Irwin said. “Gross margins of (23.4%) compared to (13.2%) in 4Q24 and (37.5%) in 1Q24, where Y/Y improvements benefited from cost-out initiatives put in place in 2024.”

While revenue was light, Ballard improved its gross margin year over year thanks to cost savings implemented last year. Still, the company posted zero net bookings in Q1, down sharply from $75-million in Q4 and $65-million in Q1 2024. “Bookings disappoint, but the 12-month backlog is near-term adequate,” Irwin said, pointing to a $92 million 12-month backlog at quarter-end.

He said much of the quarter’s revenue was driven by demand for hydrogen-powered buses. “Bus revenue was $12.5 million in 1Q25 (81% of total rev), up 41% from $8.8 million in 1Q24 (61% of total rev),” Irwin said. “In March, BLDP secured a 5MW bus order for a customer in Egypt, where delivery is expected in 2025 through 2026.”

Irwin also highlighted progress on the cost-cutting front. “Cash burn of ($26.8 million) in 1Q25 compared to ($30.0 million) in 4Q24 and ($27.3 million) in 4Q23. Management remains focused on a 30% reduction in annual OpEx, with most of the savings expected in 2025 from workforce reductions, facility consolidation, and rationalized investment.”

Irwin believes that Ballard will do $(102.5)-million in Adjusted EBITDA on revenue of $95-million in fiscal 2025.

Ballard reiterated its full-year operating expense guidance of $100-million to $120-million and expects capital expenditures of $15-million to $25-million, down from $25.8-million in 2024. Irwin said the company continues to face an uphill battle, especially with new Canadian tariffs that could increase component costs.

“Canada tariffs will increase costs, and Ballard management aims to pass these through with higher prices,” Irwin said. “Management expects around 20% of 2025 revenue to come from customers in the US, and the team hopes to pass through a roughly 20% estimated price increase to achieve a neutral impact.”

Despite near-term challenges, Roth is sticking with its price target. “We maintain our $1.25 price target using a 4.0x P/Sales multiple on the ROTH ’25 revenue estimate of $95 million,” Irwin said. “We use a P/Sales valuation to reflect low visibility on a timeline for profitability. At the end of 1Q25, Ballard had cash of $1.93 per share, so the stock is trading at a large discount to cash.”

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