Roth Capital Partners Changes Estimates on Ballard Power Systems Inc. (USA)(NASDAQ:BLDP)

Equity Analyst Matt Koranda of Investment Research Firm Roth Capital Partners issued a Company update and changed estimates on Ballard Power Systems Inc. (USA)(NASDAQ:BLDP) titled ”BLDP: Large Bus and Tram Deals Drive Higher 2016 Estimates; Maintain Buy”

The report states that ”Estimate Changes. We are revising our 2016 estimates higher, adding ~ $22mn to our revenue estimate in BLDP’s Development Stage segment (which primarily consists of bus and tram products). We now anticipate revenue of $105.5mn vs. consensus of $90.3mn and prior ROTHe of $83.3mn. We leave our 2016 GM forecast unchanged at 22.9% vs. consensus of 23.1% (we assume BLDP ships fuel cell bus modules, kits, and stacks at a blended GM of ~20%). Our revised 2016 EPS estimate is now -11c vs. consensus of -10c and prior ROTHe of -15c.”

Ballard Power Systems Inc. (USA)(NASDAQ:BLDP) provides clean energy products that reduce customer costs and risks, and helps customers solve difficult technical and business challenges in their fuel cell programs.

BLDP is a recognized world leader in proton exchange membrane (“PEM”) fuel cell development and commercialization. In order to build a clean energy growth company, our business strategy is a two-pronged approach to build shareholder value through the sale and service of Power Products and the delivery of Technology Solutions.

Ballard uses an Integrated Management System registered to ISO 9001 and ISO 14001 standards, as well as robust internal practices in the areas of automotive core tools, environment, health and safety that conform to the requirements of ISO/TS 16949 and OHSAS 18001. Ballard strives for continuous manufacturing improvement through practices such as Lean Manufacturing, 5-S and advocacy of Six Sigma.

According to the report ”We maintain our price target of $2.00 based on a 2.5x multiple applied to our 2016 revenue estimate. Peer multiples in the fuel cell segment have decreased in the last several months, and currently trade for ~1.0-2.0x

2016 consensus revenue estimates. We believe BLDP can justify a premium given the company’s leadership position in PEM technology.Factors that could impede shares of BLDP from achieving our target price include: (1) the failure to achieve commercial volumes in any one of BLDP’s end market segments; (2) increasing competition from competing technologies; (3) competition from new entrants in the PEM fuel cell sector.

On September 28 BLDP signed a joint development agreement and a supply agreement to develop and commercialize a fuel cell engine specifically designed for integration into low floor trams manufactured by CRRC Qingdao Sifang Company, Ltd. (CRRC Sifang), a Chinese rolling stock manufacturer. The agreements include 2016 delivery of ten (10) customized FCvelocity® modules and the agreements have an initial value expected to be approximately $6 million.

Ballard plans to develop a new prototype configuration of its FCvelocity® fuel cell module to deliver 200 kilowatts (kW) of net power for use in powering trams in urban deployments. An initial deployment of eight (8) fuel cell-powered trams is planned by CRRC Sifang and the City of Foshan on the Gaoming Line starting in 2017.

Ballard’s President and CEO, Randy MacEwen said “We are pleased with the strong relationship we are developing with CRRC Sifang, a company with a rich history of innovation in Chinese rail transit, to pursue the China market opportunity for fuel cell powered trams.”


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