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Ballard Power Systems stock up over 7%, defying downgrade from CIBC

Jeff Lagerquist
·2 min read
A trader works on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)
Ballard Power Systems CEO Randy MacEwen has outlined risks related to the upcoming U.S. presidential election, as well as policy uncertainty in Europe and China. (AP Photo/Richard Drew) (The Associated Press)

Ballard Power Systems (BLDP.TO)(BLDP) shares closed 6.77 per cent higher on Tuesday as the stock recovered from Monday's post-earnings drop.

Toronto-listed shares gained as much as 7.57 per cent during Tuesday's session before closing at $2.68. Ballard's stock lost nearly six per cent on Monday.

The rebound defied a downgrade from CIBC Capital Markets. Analysts warn that a “high degree of uncertainty” on the future of hydrogen will become even more uncertain in the coming months.

The Vancouver-based fuel cell maker reported second-quarter results on Monday. The update included a plunge in orders from customers, as well as plans to cut spending in response to slower-than-expected adoption. CEO Randy MacEwen says sales will be weighted to the back half of 2024, while warning of quarterly “lumpiness” for the foreseeable future.

Speaking to stock analysts on Monday, MacEwen also outlined risks related to the upcoming U.S. presidential election, as well as policy uncertainty in Europe and China.

CIBC Capital Markets analyst Krista Friesen downgraded Ballard’s Nasdaq-listed shares to “underperformer,” while slashing her price target by more than half, from US$3.50 to US$1.60.

“While we believe the company is operating well and is achieving key product milestones, the macro environment is increasingly less supportive of hydrogen adoption, and the upcoming U.S. election adds an additional level of uncertainty,” she wrote in a note to clients.

“In the event of a Republican win in November, while we think it would be challenging to claw back funding that has already been allocated, spending and/or credits which are currently being debated likely face a significant uphill battle.”

For example, Ballard noted that the debate over the 45V Clean Hydrogen tax credit is still ongoing, despite guidance issued in December by the Department of Treasury and the Internal Revenue Service.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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