RBC Capital Markets Sees Potential in UK Hydrogen Stocks Amid Volatility
Key Ideas
- RBC Capital Markets reaffirms confidence in ITM Power PLC, citing commercial momentum and raised guidance for 2025.
- ITM Power PLC is undervalued in the market, with a focus on its cash pile over the business potential, according to RBC.
- Ceres Power Holdings PLC faces challenges due to partner risk and technology lag, resulting in a price target reduction by RBC.
- Despite sector volatility, UK's focus on green hydrogen development through initiatives like HySpeed project is expected to benefit domestic players like ITM Power.
RBC Capital Markets has expressed optimism towards the UK hydrogen sector, specifically highlighting ITM Power PLC as a strong contender despite recent stock market turbulence. The investment bank reiterated their 'outperform' rating for ITM, pointing out the company's positive commercial progress and increased revenue and cash guidance for 2025. RBC believes that ITM is undervalued in the market, with current pricing largely reflecting the company's cash reserves rather than its business potential. On the other hand, Ceres Power Holdings PLC faces challenges related to partner risk and technological competitiveness, leading to a price target adjustment by RBC. The article also discusses the ongoing consolidation trend in the sector and the importance of government-backed initiatives like the HySpeed project in advancing green hydrogen development in the UK. Despite near-term uncertainties, RBC suggests that opportunities still exist in the sector for investors willing to navigate through the volatility, with ITM Power positioned favorably to capitalize on these opportunities.