Ballard Power's (BLDP) Toyota Tsusho Partnership Opens-up Key Market; FBR Affirms at 'Outperform'
FBR & Co. affirms Ballard Power Systems (Nasdaq: BLDP) with an Outperform rating and $3 price target following news of a recent partnership with a Toyota unit.
The firm is largely positive on the announcement and offered the following key observations today:
- Japan is serious about developing hydrogen as a fuel source. Japan formulated a national growth strategy called a Strategic Road Map for Hydrogen and Fuel Cells 2014, with the goal of launching fuel cell buses and forklift trucks in 2016 and promoting the adoption of 800,000 FCEVs by 2030, showing the government is firmly behind the buildout of hydrogen as a fuel source.
- Toyota Tsusho is an excellent partner given its history with hydrogen and fuel cells. The company currently operates fixed and mobile hydrogen fuel stations in Tokyo. Furthermore, Tsusho is also conducting feasibility tests to manufacture and sell hydrogen using sewage biogas and to manufacture CO2-free hydrogen using electricity from wind power. Given its history with hydrogen and fuel cells, along with its mammoth parent, we view Tsusho as an excellent partner for Ballard.
- Close to formalizing collaboration with Broad-Ocean Motor, showing it remains on track. We believe Ballard may be close to formalizing its collaboration with Zhongshan Broad-Ocean Motor, originally announced on July 26 and expected to close in 3Q16.
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