Roth Positive on Ballard Power's (BLDP) Protonex Acquisition; Offers Commentary

Roth Capital affirms Ballard Power Systems (Nasdaq: BLDP) with a Buy rating and $2.55 price target following the company's recent Protonex acquisition.

Analyst Matt Koranda views the acquisition as a positive for Ballard Power. The analyst offered the following thoughts: From our perspective, the Protonex acquisition appears to be a largely positive transaction for BLDP, and consistent with prior management commentary. If we extrapolate on Protonex’s recent growth CAGR of 22%, we believe the multiple paid (at announcement) represents ~1.5x potential 2016 revenues, which appears roughly inline with public fuel cell peers that trade for a median of 1.6x 2016 consensus revenue estimates on an EV/S basis (for reference, BLDP trades for 1.7x 2016 consensus revenues). In the acquisition, BLDP gets (1) a broadened fuel cell portfolio of smaller scale portable solutions (generally <1kW, whereas BLDP has focused on >1.5kW); (2) a power management product that diversifies its revenue base and expands its TAM; and (3) potentially deeper access with strategic customers (including key branches of the U.S. military). This comes at a GM profile that should be accretive to BLDP’s core GMs. Importantly, BLDP’s release indicates that Protonex was profitable on an adjusted EBITDA basis during its last fiscal year (ended Sep’14).

Roth's Q2 gross margin estimate moves from 11.3 percent to 6.0 percent.

For an analyst ratings summary and ratings history on Ballard Power Systems click here. For more ratings news on Ballard Power Systems click here.

You May Also Be Interested In

• Bark Inc. (BARK) PT Raised to $19 at Jefferies Following 20:1 Reverse Split
• Bernstein SocGen Group Starts Pepsico (PEP) at Market Perform
• UBS Downgrades Hyundai Mobis Co Ltd. (012330:KS) to Neutral