Ballard Power Systems (BLDP.TO)(BLDP) shares were downgraded by CIBC Capital Markets as analysts see a “high level of uncertainty” about the future of hydrogen, which is expected to become even more uncertain in the coming months.
The Vancouver-based fuel cell maker reported its second-quarter results on Monday. The update included a slump in customer orders as well as plans to cut costs in response to slower-than-expected rollouts. CEO Randy MacEwen says sales will be concentrated in the second half of 2024, but warns of “unevenness” in quarterly numbers for the foreseeable future.
Speaking to stock market analysts on Monday, MacEwen also addressed the risks associated with the upcoming US presidential election as well as political uncertainty in Europe and China.
Krista Friesen, an analyst at CIBC Capital Markets, downgraded Ballard’s Nasdaq-listed shares to “underperformer” and cut her price target by more than half, from $3.50 to $1.60.
“We believe the company is performing well and achieving key product milestones, but the macroeconomic environment is becoming less supportive of hydrogen adoption and the upcoming U.S. election is adding additional uncertainty,” she wrote in a note to clients.
“In the event of a Republican victory in November, we believe it will be challenging to recoup funds already allocated, but the spending and/or borrowing currently being discussed will be a pretty uphill battle.”
For example, Ballard pointed out that the debate over the 45V Clean Hydrogen tax credit is still ongoing, even though the Treasury Department and the Internal Revenue Service issued guidance on the matter in December.
In Toronto, Ballard shares rose 3.37 percent to $2.59 at 10:52 a.m. ET on Tuesday. Shares lost nearly six percent of their value on Monday.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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