Ballard Power Systems Inc. (USA): Bull Cheers Heavy-Duty Mobility Strategy Following “Record” 4Q17 Outcome

FBR's Carter Driscoll calculates that based on the preannouncement, BLDP has outperformed his expectations by 20% on revenue.


Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) shares skyrocketed almost 34% yesterday after preannouncing a historically high performance for its fourth quarter: a record $120 million in yearly revenues coupled with positive adjusted EBITDA.

FBR analyst Carter Driscoll notes that the $120 million suggests around $39 million for the fourth quarter, which trounces his $32.5 million estimate by 20%- likely riding a wave of robust heavy-duty (HD) mobility sales in China.

In reaction, the analyst maintains a Buy rating on BLDP stock with a price target of $6, which implies a 60% upside from where the stock is currently trading. (To watch Driscoll’s track record, click here).

Additionally, BLDP closed out 2017 at around $60 million, which to Driscoll implies subtle cash burn at most for the fourth quarter.

Last week, negative buzz had nipped at BLDP’s heels, a report that the management team of this energy player shakes off as “unsubstantiated” and to put it bluntly, “simply false.”

“Management cited two specific examples of ‘false claims’ regarding its progress building out a supply chain and deploying commercial hybrid fuel cell electric vehicles. First, management disclosed the number of fuel cell stacks its joint venture with Synergy Hydrogen has produced since opening last September – 1,145 – including 558 in the month of December, suggesting the facility is ramping as planned. Second, management disputed the notion that there are no fuel cell bus demonstration lines operating in three areas – Yunfu, Sanshui (urban district of Foshan) and Guangdong. Ballard cited 11 buses with its technology have been operating for well over a year in Foshan and Yunfu, and that 13 more buses were awaiting receipt of license plates. We believe Ballard’s heavy-duty mobility strategy, in China and also in the EU and U.S., remains on track for substantial growth in 2018 and beyond,” Driscoll surmises.

TipRanks points to a cautiously optimistic analyst consensus assessing Ballard, with half the analysts polled in the last 3 months bullish on the stock and half on the sidelines. With a return potential of 42%, the stock’s consensus target price stands at $5.38.

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