Shares of fuel-cell specialist Ballard Power Systems (US:BLDP) popped slightly over 5% higher on the midweek session as the major equity indexes also woke up from their sideways slumber. Thanks to a broader political framework bolstering clean and sustainable energy solutions, BLDP stock enjoys a positive backdrop. At the same time, the underlying enterprise still faces significant challenges.

On the optimistic front, the Canadian company continues to make progress in its core industry. On May 3, the company announced an order for 3.6 megawatts (MW) of fuel-cell systems from a European provider of clean energy solutions for stationary power applications, per Ballard’s press release.

Ballard Power Systems is recognized as a world leader in proton exchange membrane (“PEM”) fuel cell power system development and commercialization, according to Finpedia. Management is pursuing a corporate strategy and business model that mitigates risk by diversifying its business across a portfolio of market opportunities that are enabled by substantially the same core competencies, technology, products and intellectual property.

The energy specialist’s fuel-cell systems “will be integrated into stationary power units which provide zero-emission power for a range of applications, including construction sites, [electric vehicle] charging stations, and data centers,” added the PR.

Unusual Options

Over the five sessions through May 17, BLDP stock gained nearly 5.25% of market value. By comparison, the Invesco WilderHill Clean Energy ETF (US:PBW) was up 2.3% in the same period; Ballard Power shares make up 1.2% of the exchange-traded fund’s holdings.

Meanwhile, Ballard also represented a highlight on Fintel’s screener for unusual stock options volume. Following the close of the May 16 session, call volume hit 22,114 contracts against an open interest reading of 16,952. On average, call volume reaches only 161.

On the other hand, put volume only mustered 387 contracts against open interest of 5,617. Typically, put volume averages 82 contracts. Moreover, Fintel’s data for options sentiment shows a put/call ratio of 0.33, demonstrating an overall optimistic framework. With calls generally representing bullish wagers, put/call ratios lower than one indicate a positive outlook.

Interestingly, options flow sentiment for BLDP stock stands as overwhelmingly optimistic this month. Still, investors need to consider the opposite side of the equation.

Despite the many positives undergirding Ballard Power, BLDP stock remains down 3.81% since the start of the year. In the past 12 months, it stumbled more than 34%.

Revenue Declines

One factor that continues to weigh on investors is Ballard’s fiscal performances. For the first quarter of 2023, net loss came out to $33.9 million, which signified a conspicuous improvement over the net loss of $40.4 million in the year-ago quarter. On a per-share basis, the red ink came out to a loss of 11 cents in Q1 2023 (as opposed to a loss of 14 cents per share in Q1 2022).

However, total revenue amounted to only $13.3 million in the three months ended March 31. This tally fell 37% below the $21 million in sales posted in Q1 2022.

Fueling concerns, Ballard Power President and CEO Randy MacEwen disclosed that, “[a]s previously communicated, we continue to see gross margin pressures into 2024 given our revenue mix, pricing strategy, investments in production capacity, and timing lag before our production volumes ramp and our product cost reduction initiatives move into production.”

Still, MacEwen emphasized that “[w]ith our Q1 expenses also on plan, we are tracking to our full-year guidance ranges for operating and capital expenses. We continue to prioritize investments in our technology and product development programs, product cost reduction initiatives, customer platform wins, customer experience, and advanced manufacturing.”

The latest rating for BLDP stock is a reiterated ‘hold’ by Truist Financial’s Bronson Fleig. The expert forecasts a price target of $5 per share. On Wednesday, BLDP closed at $4.55. UBS‘ Manav Gupta, who’s got an equivalent ‘neutral’ rating on the shares, is a bit more optimistic, with a $6.50 per share 12-month price target.

This article originally appeared on Fintel

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