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Citi says 'buy' Ceres Power and ITM Power

By Sean Farrell

Date: Thursday 17 Sep 2020

Citi says 'buy' Ceres Power and ITM Power

(Sharecast News) - Citi advised investors to 'buy' shares of Ceres Power and ITM Power as the bank initiated coverage of European hydrogen equipment makers.
Edward Maravanyika, Cit's analyst, said the bank was covering the companies as hydrogen comes to the fore of the decarbonisation debate.

Ceres is high risk with a target price of £8.10 and ITM is also high risk with a target price of £4.30, Maravanyika said.

Ceres reported "significant growth" across its business in the year to the end of June on 9 July and predicted revenue would rise by up to 25% in the current year. Bosch has started making the company's fuel technology and Ceres has also formed a partnership with China's Weichai.

"We favour Ceres for its asset-light, proprietary fuel cell licensing model that is backed by strong strategic equity partners in the form of Bosch and Weichai," Maravanyika wrote in a note to clients. "Its fuel cell is fuel-agnostic and we see Ceres' revenue growing to £1.4bn by 2030 on just 2% share of the forecast addressable market."

ITM said in June that income for the year to the end of April fell as much as 60%. However, the company's share price has more than tripled since the start of 2020.

Maravanyika said: "We like ITM Power's exposure to more flexible PEM electrolyers which are suited to intermittent renewable power sources in the electrolysis process. We see its JV with Linde giving it EPC capabilities that we see raising its competitiveness in contract bidding rounds."

Ceres shares rose 6.4% to 566p at 14:38 BST and ITM shares rose 2.5% to 269.50p.


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