Canada’s Ballard Power (BLDP) (TSE:BLDP), the longstanding fuel-cell manufacturer whose first brush with fame came during the dot-com bubble near the turn of the century, has been a decades-long disappointment for investors. Near-term prospects aren’t any brighter, as the company announced a restructuring to reduce costs “amid a slowdown in hydrogen infrastructure development and delayed fuel cell adoption.” However, I hold a Bullish rating on BLDP, especially for patient investors, on the strength of its balance sheet until greater fuel cell adoption occurs.
Although I have a positive outlook on the stock, it does have a history of disappointment. Ballard’s market cap has twice reached the $10 billion mark, albeit aided by periods of investor exuberance in 2000 and then during the 2021 short-squeeze market. Meanwhile, the high point for annual revenues was just around $120 million, and that was in 2017. On the back of management’s downbeat guidance, analysts are expecting Ballard to post just $75 million in revenues for FY2024.Nevertheless, the company hasn’t been without its successes, especially in the bus market. In April 2024, Ballard signed its largest fuel cell order in company history with a European bus manufacturer, followed shortly by a separate deal with a UK bus manufacturer, and the company has had a series of contracts with its compatriot Canadian firm New Flyer, proudly based in the author’s hometown of Winnipeg. For the record, New Flyer isn’t a fledgling operation and supplies buses across North America to large metropolitan areas, including New York.
Still, none of this has been enough to lead Ballard to prosperity. The restructuring, though a disappointing signal on prospects, has been long coming. Ballard was built for the big time and was never designed to be profitable with revenues in the $100 million range. This was supposed to be a growth business, not one where fat needed to be cut before the cherished land arrived.
I remain bullish on Ballard despite its weak near-term prospects. That’s due to a belief in the future of fuel cells and Ballard’s fortress balance sheet. At last report, the company had $637 million of cash & equivalents, far outrunning its balance sheet of just under $400 million. This is a company that, prior to the recent restructuring efforts, was burning about $30 million of cash per quarter. At that rate, it would take 2 years before the cash fortress shrunk to BLDP stock’s current market value.
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