Roth/MKM adjusted its financial outlook for Ballard Power Systems (NASDAQ:BLDP), a company specializing in fuel cell technology. The firm reduced the price target on the stock to $1.75 from the previous $2.00, while keeping a Neutral rating on the shares.
The decision to lower the price target was influenced by the analyst's view that Ballard is unlikely to secure the necessary customer orders to achieve the anticipated revenue and gross margin improvement in the fourth quarter of 2024. The analyst pointed out that despite Ballard's initiative to reduce operating expenses by 30%, the specific cash costs have not been disclosed.
According to the analyst, Ballard is projected to continue experiencing a cash burn of approximately $150 million in 2024. This figure takes into account the cash costs related to restructuring, which are expected to be balanced by any savings realized in the fourth quarter of 2024.
However, the measures taken by Ballard are anticipated to reduce the cash burn to around $100 million in 2025, assuming capital expenditures (CAPEX) of between $30 million and $35 million.
The maintenance of the Neutral rating indicates that while the analyst acknowledges the cost-cutting efforts by Ballard, there remains uncertainty regarding the company's ability to significantly improve its financial position in the near term.
The revised price target reflects the challenges Ballard faces in achieving its previously expected financial targets.
In other recent news, Ballard Power Systems reported second-quarter earnings, with revenues falling short of the expected $18.9 million consensus, reaching only $16.1 million.
The company's EBITDA was reported at a loss of $35.4 million, slightly better than the consensus expectation of a $36.1 million loss. Despite the financial outcomes, Ballard's management expressed confidence in achieving positive gross margins in the fourth quarter.
The company is reconsidering plans for a proposed gigafactory in Texas due to a slower-than-expected increase in demand. In terms of product development, Ballard Power Systems launched its ninth-generation PEM fuel cell engine, the FCmove XD, and made progress with Project Forge to scale graphite bipolar plate production.
Several analysts have revised their stock price targets for Ballard Power Systems. KeyBanc maintained its Sector Weight rating, while BMO Capital, Lake Street Capital Markets, Truist Securities, and Jefferies reduced their price targets. These adjustments came after Ballard Power Systems' recent financial disclosures and the company's caution regarding capital expenditure. These are the recent developments for Ballard Power Systems.
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