Yesterday, Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) indicated it had received an undisclosed amount of purchase orders to accelerate fuel stack development work for an automotive application with Volkswagen.

In reaction, FBR analyst Carter Driscoll reiterates an Outperform rating on BLDP with a price target of $3.00, which represents a 36% increase from where the shares last closed.

Both BLDP and Volkswagen are amid a six years engineering services contract agreement called the HyMotion program that lasts until March 2019, although it has an option to extend for an additional two years. Originally when the deal was signed in the first quarter of 2013, the agreement was for four years, and was worth c$60 million to C$100 million. In March of 2015, BLDP and Volkswagen agreed to two more years, and BLDP projected the deal was worth an added C$40 million.

Driscoll contends, “We believe the design acceleration is to speed delivery of a light-duty fuel cell electric vehicle. Volkswagen recently transferred all of its fuel cell design work to its Audi brand. The scope of the accelerated work includes reconfiguring the current fuel cell stacks Ballard has been designing as well as accelerating development of a next-generation fuel cell stack. We view the accelerated work positively, and it should have a modest positive impact on both 2016E and 2017E revenue, but it is hard to quantify the exact financial impact for Ballard.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Carter Driscoll is ranked #4,060 out of 4,183 analysts. Driscoll has a 19% success rate and faces a loss of 18.5% in his yearly returns. When recommending BLDP, Driscoll loses 23.3% in average profits on the stock.

TipRanks analytics demonstrate BLDP as a Buy. Based on two analysts polled in the last 3 months, 100% rate a Buy on BLDP. The consensus price target stands at $2.75, marking a nearly 26% upside from where the stock is currently trading.screen-shot-09-27-16-at-08-41-pm