Top Analysts Light Up Alt Energy Stocks

Ballard Power

Canada-based Ballard Power Systems Inc. (NASDAQ: BLDP) makes, sells and services proton exchange membrane fuel cells for heavy-duty uses in marine systems, backup power systems and transportation. Souther initiated coverage on the stock with a Buy rating and a price target of $30. The stock closed Thursday at $20.63, in a 52-week range of $8.87 to $42.28. The stock was up more than 300% in early February but traded down nearly 12% for the year to date.

Souther had these comments on the company:

We see Ballard as best positioned in the fuel cell space for heavy-duty applications, where we are most bullish for the technology’s prospects, and believe the company has the partners, capital, and experience to establish and maintain its leading market position. … Our $30 PT [price target]  is based on a 15x EV [enterprise value]/sales multiple on our 2024E [estimate] for Ballard’s main business, as well as 7.5x EV/sales for our estimates of the company’s JV [joint venture] with Weichai in China.”

The median price target on the stock is $32.00 and the high target is $42.10, implying upside potential of around 50% to the median and 100% at the high target. At B. Riley’s target, the upside potential is about 45%. In early trading Friday morning, the stock added about 3.7%.

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Workhorse

Electric truck maker Workhorse Group Inc. (NASDAQ: WKHS) had added more than 1,800% to its share price by early February. By late February, the shares had lost about two-thirds of that gain after the U.S. Postal Service awarded the contract for a new fleet of postal delivery vans to the defense subsidiary of Oshkosh. Souther initiated B. Riley’s coverage of the stock with a Buy rating and a price target of $20. The stock closed Thursday at $11.65, in a 52-week range of $2.08 to $42.96. The stock currently trades down for the year to date by around 37%.

In his comments on the company, Souther wrote:

Workhorse has the potential to gain early footing with key customers as it ramps up production and sales this year. The company will be beating to market most of the electric competition focused on the delivery space by quarters or years with its C-Series ramp expected this year, and we believe the larger size cargo offers differentiation in the space relative to the smaller-volume vans coming from the large auto OEMs and upstarts. We base our $20 price target on an ~4x EV/sales multiple on our 2023 revenue estimate of $538M, with net cash of ~$42M and ~$199M attributable to the company’s ~10% stake in Lordstown Motor Company.

The median price target on the stock is $18.00 and the high target is $29.00, implying upside potential of around 55% to the median and 150% at the high target. At B. Riley’s target, the upside potential is nearly 72%. The stock gained around 6.5% in Friday morning trading.