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Investing.com -- Ceres Power (LON:CWR), a European developer of solid oxide fuel cell and electrolysis technology, has been upgraded to “buy” by analysts at Goldman Sachs following its first-half 2025 results, as analysts highlight the company’s positioning to benefit from growing data center power demand.
Shares of the UK-based company were up 5.9% at 05:41 ET (09:41 GMT).
The company reported first-half revenue of £21 million, exceeding Visible Alpha consensus estimates of £20.5 million.
Adjusted EBITDA was negative £11.3 million, which outperformed expectations of negative £12.5 million, resulting in an Adjusted EBITDA margin of negative 50%.
Cash and short-term investments totaled £104.07 million, up from £102.5 million at the end of 2024, supported by a £1.6 million positive cash inflow in 1H25 through disciplined working capital management.
Ceres did not announce significant new order intake for the year to date. The company now expects full-year revenue of approximately £32 million, down roughly 40% from prior guidance of £48 million and consensus estimates of £52 million.
Analysts noted the company is in advanced discussions for a new manufacturing license agreement, though the timing and associated revenue remain uncertain.
Fuel cells, particularly solid oxide fuel cells (SOFCs), are seen as a solution to rising electricity demand from data centers.
Goldman Sachs’ U.S. team forecasts global data center electricity demand will increase 160% by 2030, driven by AI, cloud computing, and storage requirements.
Fuel cells offer high efficiency, reliability, and quick deployment, meeting the need for on-site, green power.
Ceres’ partnerships position it to capture this demand. Doosan Fuel Cell has started mass production of Ceres-licensed metal-supported SOFC systems at its South Korea facility, with annual capacity of 50 MW and initial sales expected by year-end 2025.
Delta Electronics is developing megawatt-scale SOFC systems for AI data centers, with production scheduled to begin by the end of 2026.
In addition, a partnership with Shell in India has produced hydrogen from a megawatt-scale solid oxide electrolysis cell (SOEC) demonstrator at Bangalore, with a module efficiency of 37 kWh/kg H2.
Ceres’ asset-light business model focuses on licensing and technology provision rather than direct manufacturing.
Licensing and royalty revenues from partners such as Doosan, Delta, and Denso are expected to drive gross margin expansion to at least 80% from 2025.
Analysts forecast a 20% reduction in operating expenses heading into 2026 as part of a 12-month business transformation program.
Analysts revised mid- to long-term revenue forecasts for 2028, 2029, and 2030 upward by 0.3%, 5%, and 10%, respectively, reflecting potential growth from data center demand.
EPS estimates for 2025–2027 were revised to negative 17.7 pence, negative 3.3 pence, and negative 2.8 pence, reflecting near-term revenue weakness, while longer-term growth expectations remain strong.
Goldman Sachs set a 12-month price target of 190p, up from 138p, implying roughly 20% upside, based on a 2030 EV/EBITDA multiple and discounted cash flow analysis.
Key risks include slower progress in Asian contracts, delays in partners’ manufacturing plans, higher-than-expected costs or capital expenditure, and potential cancellations of existing partnerships.