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BMO Capital has adjusted its outlook on Ballard Power Systems (NASDAQ: NASDAQ:BLDP), reducing the price target to $1.70 from the previous $2.25. The firm maintained its Underperform rating on the stock. This revision comes in the wake of Ballard Power's recent financial disclosures, which failed to indicate a significant uptick in demand for the company's fuel cell applications, particularly in the mobility sector.
Ballard Power Systems recently announced a decrease in its capital expenditure forecast for the fiscal year 2024. The company is reevaluating its plans to proceed with the construction of a proposed gigafactory in Texas, given the slower-than-expected increase in demand. The hesitancy surrounding this major investment decision reflects the company's current market challenges.
The firm's second-quarter orders amounted to $5 million, while its 12-month order book dropped to $75.5 million. Additionally, Ballard's backlog, which represents future revenue that is contracted but not yet recognized, has decreased to $169.5 million.
In other recent news, Ballard Power Systems has been the subject of multiple price target adjustments. Lake Street Capital Markets reduced its target from $15.00 to $10.00, while maintaining a Buy rating, citing a delay in Ballard's decision to expand production capacity within the United States. Truist Securities and Jefferies both lowered their price targets to $2.00 from previous targets of $3.00 and $3.25 respectively, each maintaining a Hold rating.
These adjustments come in the wake of Ballard's recent earnings report, where the company reported revenues of $16.1 million, falling short of the expected $18.9 million consensus. The company's EBITDA was reported at a loss of $35.4 million, slightly better than the consensus expectation of a $36.1 million loss. Despite these financial outcomes, Ballard's management expressed confidence in achieving positive gross margins in the fourth quarter.
InvestingPro Insights
In light of BMO Capital's recent adjustments to Ballard Power Systems' outlook, real-time data and insights from InvestingPro provide additional context for investors. With a market capitalization of $547.92 million and a negative P/E ratio of -3.77, Ballard Power Systems is navigating a challenging financial landscape. The company's revenue growth over the last twelve months is notable at 39.86%, yet this is tempered by a significant gross profit margin deficit of -20.88%.
InvestingPro Tips highlight the company's current financial position, with a key observation that Ballard holds more cash than debt, which could be a stabilizing factor. However, the stock's volatility and the analysts' consensus that profitability is unlikely this year add to the risk profile. Furthermore, with the stock trading near its 52-week low and showing a substantial price decline over the last year, investor sentiment appears cautious.
For those considering Ballard Power Systems as a potential investment, it's worth noting that there are 15 additional InvestingPro Tips available, offering deeper insights into the company's financial health and stock performance. These tips, along with the latest data, can be found on InvestingPro's dedicated page for Ballard Power Systems at https://www.investing.com/pro/BLDP.
Investors may find these insights particularly valuable as they weigh the implications of BMO Capital's revised price target and the company's strategic decisions moving forward.
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