In a research report sent to investors a short while ago, MLV analyst Carter Driscoll initiated coverage on Ballard Power (NASDAQ:BLDP) with a Buy rating and a $2.50 price target, which implies an upside of 69% from current levels.
Driscoll highlighted, “Our investment thesis is based on: (1) Growing end markets – we forecast the PEM fuel cell market to grow at a ~21% CAGR from $1.2Bn in 2013 to reach ~$2.5Bn in 2018, driven by growth in stationary, power generation and mobility applications. (2) Growing market share – BLDP is wellpositioned to grow its market share with wins in telecom backup power and mobility, along with expectations of new licensing deals from the company’s newly expanded IP portfolio. We expect better commercialization of the IP portfolio and expansion into lateral market opportunities with more systems solutions should also drive higher margins. (3) Reasonable valuation – we believe the stock has been unfairly linked to crude oil’s decline, though BLDP does not directly compete with fossil fuels.”
Bottom line, “We believe Ballard has sold off, partially in sympathy with the decline in oil, which we believe is unwarranted. As a result, we believe the shares are undervalued. We value the shares using a 5-year DCF, which uses a 9.5% cost of equity and 3.0% terminal growth rate, yielding an equity value of ~$2.50.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Carter Driscoll has a total average return of -12.3% and a 33.3% success rate. Driscoll is ranked #3215 out of 3428 analysts.