Roth Keeps Ballard Power (BLDP) at 'Buy' Following Meetings with Management; Positive on Telecom Sale
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Roth Capital affirms Ballard Power (Nasdaq: BLDP) with a Buy rating and $2.50 price target following recent meetings with management.
Analyst Craig Irwin commented today:
We met with Ballard CEO Randy MacEwen and CFO Tony Guglielmin for an update, where they were most constructive on the transformational nature of the Broad-Ocean and Synergy-JV agreements. We believe Ballard may exceed its $4m savings target, given tight recent execution, and the new project pipeline remains healthy. While orders have historically driven Ballard's stock, we believe the company is moving into more of an execution phase, where we believe the team is well positioned to meet near-term expectations.
Foshan, China based Broad-Ocean has entered an agreement with Synergy related to 10,000 fuel cell buses and delivery trucks, using Ballard PEM technology. The Ballard 85kW stack has already been permitted for Foshan, China buses, and the partners are working on permitting a 30kW engine for smaller buses, so they will be eligible for up to 1m yuan in subsidy funding from state and local government. Synergy-JV production should be online in late 2017.
Irwin sees the Telecom asset sale as a good move, commenting,
Ballard sold the Telecom backup business to CHEM for up to $6.1m, where $3.0m was paid in May, with $3.1m to be paid over the next 18 months under an earn out agreement. CHEM also agreed to purchase a minimum of $2m in stacks over the earn out period. The transaction should allow Ballard to retain exposure to the Telecom backup market as a stack supplier, while lowering near-term investment.
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