By Nicole Mordant
VANCOUVER , March 30 (Reuters) - Shares of Ballard Power Systems Inc are up 48 percent in the past year, including 26 percent this month, on hopes the former cash-guzzler has finally found commercial markets for its fuel cells and that profitability is just around the corner.
The small Canadian company, a wisp of the pioneering automotive fuel cell giant it was a decade ago, has slimmed down its ambitions after failing to live up to early expectations and is now selling its technology mostly for use in back-up power systems and forklifts.
Last month, Ballard forecast its revenues could increase by 35 percent this year. That would put it on track for an operating profit in 2011, the company said.
Fans say Ballard is a totally different company from the loss-making operation of the past and that its prospects in the markets it now targets -- back-up power and materials handling -- are excellent as it is one of only a few fuel cell makers left in the world.
Detractors say investors have lost patience and interest with the fuel cell industry -- and Ballard, which has promised much and delivered little.
BUY
'In the applications that Ballard is currently targeting, in the context of the stock price, the company has an excellent opportunity to exploit those applications,' said BMO Capital Markets analyst Brian Piccioni.
Ballard has partnered with two small firms, IdaTech and Acme, to develop fuel cell-driven back-up power systems for the wireless telecom industry in India. It also sells fuel cells for use in forklifts, some of which Wal-Mart Canada has bought.
Piccioni said Ballard's big opportunity lies in back-up power, which he says is a 'huge' market in the developing world, where power supply can be intermittent and fuel cells can be an efficient substitute for diesel generators.
He rates Ballard's stock 'outperform' and has a $3.70 target. That represents a steep climb from Ballard's price of $2.85 on Nasdaq on Tuesday. The stock was down 5 Canadian cents at C$2.90 on the Toronto Stock Exchange.
'There are not a lot of technology companies out there that are expecting to grow their revenues by (35 percent),' Piccioni told Reuters.
Although Ballard continues to make automotive fuel cells, Piccioni is not counting on this side of the business for profits, although a recent $24 million order from Daimler AG is a nice extra.
SELL
Cormark Securities analyst MacMurray Whale dropped research coverage of Ballard this week, saying there isn't much future for fuel cell technology in the automotive sector where batteries are taking center stage as the industry works toward a clean alternative to gasoline.
'Even if the development of electric vehicle technology is to falter on its path to commercialization, fuel cell and hydrogen technology does not stand ready to pick up the slack, so either way the outlook is dim for this technology in the automotive space,' Whale said in a note to clients.
RBC Capital Markets analyst Stuart Bush worries that Ballard is too reliant on its back-up power partners IdaTech and Acme. Last September IdaTech, which builds the systems using Ballard's fuel cells, missed a development deadline that Ballard said would dent its volumes this year.
Bush, who rates Ballard 'underperform' and has a $1 target on the stock, says there is a risk of further delivery delays.
($1=$1.02 Canadian)
(Editing by Rob Wilson) Keywords: BUYSELL/BALLARD (nicole.mordant@reuters.com; +1 604 664 7315; Reuters Messaging: nicole.mordant.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
VANCOUVER , March 30 (Reuters) - Shares of Ballard Power Systems Inc are up 48 percent in the past year, including 26 percent this month, on hopes the former cash-guzzler has finally found commercial markets for its fuel cells and that profitability is just around the corner.
The small Canadian company, a wisp of the pioneering automotive fuel cell giant it was a decade ago, has slimmed down its ambitions after failing to live up to early expectations and is now selling its technology mostly for use in back-up power systems and forklifts.
Last month, Ballard forecast its revenues could increase by 35 percent this year. That would put it on track for an operating profit in 2011, the company said.
Fans say Ballard is a totally different company from the loss-making operation of the past and that its prospects in the markets it now targets -- back-up power and materials handling -- are excellent as it is one of only a few fuel cell makers left in the world.
Detractors say investors have lost patience and interest with the fuel cell industry -- and Ballard, which has promised much and delivered little.
BUY
'In the applications that Ballard is currently targeting, in the context of the stock price, the company has an excellent opportunity to exploit those applications,' said BMO Capital Markets analyst Brian Piccioni.
Ballard has partnered with two small firms, IdaTech and Acme, to develop fuel cell-driven back-up power systems for the wireless telecom industry in India. It also sells fuel cells for use in forklifts, some of which Wal-Mart Canada has bought.
Piccioni said Ballard's big opportunity lies in back-up power, which he says is a 'huge' market in the developing world, where power supply can be intermittent and fuel cells can be an efficient substitute for diesel generators.
He rates Ballard's stock 'outperform' and has a $3.70 target. That represents a steep climb from Ballard's price of $2.85 on Nasdaq on Tuesday. The stock was down 5 Canadian cents at C$2.90 on the Toronto Stock Exchange.
'There are not a lot of technology companies out there that are expecting to grow their revenues by (35 percent),' Piccioni told Reuters.
Although Ballard continues to make automotive fuel cells, Piccioni is not counting on this side of the business for profits, although a recent $24 million order from Daimler AG is a nice extra.
SELL
Cormark Securities analyst MacMurray Whale dropped research coverage of Ballard this week, saying there isn't much future for fuel cell technology in the automotive sector where batteries are taking center stage as the industry works toward a clean alternative to gasoline.
'Even if the development of electric vehicle technology is to falter on its path to commercialization, fuel cell and hydrogen technology does not stand ready to pick up the slack, so either way the outlook is dim for this technology in the automotive space,' Whale said in a note to clients.
RBC Capital Markets analyst Stuart Bush worries that Ballard is too reliant on its back-up power partners IdaTech and Acme. Last September IdaTech, which builds the systems using Ballard's fuel cells, missed a development deadline that Ballard said would dent its volumes this year.
Bush, who rates Ballard 'underperform' and has a $1 target on the stock, says there is a risk of further delivery delays.
($1=$1.02 Canadian)
(Editing by Rob Wilson) Keywords: BUYSELL/BALLARD (nicole.mordant@reuters.com; +1 604 664 7315; Reuters Messaging: nicole.mordant.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.