Ballard Power Systems Inc (NASDAQ:BLDP) finds itself at crossroads after the underperformance of the past year. In 2018 alone, the stock shed more than 45% in market value as fuel cell stocks came under immense short selling pressure. In contrast, the stock was up by more than 100% in 2017.
Ballard Power Price Analysis
Amidst the underperformance of 2018, the stock has once again started showing signs of bottoming out as underlying fundamentals continue to inch higher. The company is in the process of rolling out a series of next-generation fuel cell stacks as it continues to revamp its product line.
In addition, the fuel cell company has inked strategic partnerships with Chinese partners to ramp up production, all in the effort of taking advantage of growing demand for its fuel cell products. With demand for alternative sources of power edging higher, fuel cell stocks are starting to elicit interest from investors.
Ballard Power is already up by more than 30% for the year, as a turnaround from record lows continues to gain momentum. The catalysts behind the recent upswing are remarks by CEO, Randall MacEwen, which indicate fuel cell is a disruptive technology set to revolutionize the world as clean energy technologies take over.
When it comes to price action, a breach of the $2.80 level has once again reaffirmed the emerging uptrend as the stock continues to make a run for last year highs. After the recent spike, the stock faces immediate resistance at the $3.60 level. A rally-followed by a close above the critical resistance level should open the door for the stock to make a run for its 52-week highs of $4.62.
On the downside, Ballard Power faces immediate support at the $2.80 level on any sell-offs. A drop followed by a close below the critical support level could give short sellers a reason to continue pushing the stock lower probably to 52-week lows of $2.60.
What Does Ballard Power Do?
Ballard Power is a clean energy company that develops products for reducing customer costs as well as risks as part of its fuel cell program. The company is engaged in the development, sale, and service of proton exchange membrane fuel cell products
Ballard Power resurgence in the market has to do with growing optimism that its products could have a significant impact on the alternative energy push. Current electric cars have limited ranges as well as long recharging times. However, with the use of fuel cell stacks that the likes of Ballard power are developing efficiency could be on its way.
Ballard Power has already touted its next-generation fuel stacks for having the capability of triggering a 33% improvement in power density expected to lead to a 40% reduction in overall cost of ownership. That said the company would be the darling of Wall Street on its next-generation fuel stacks proving to have long ranges as well as favorable economics in electric cars
Dependence on China while a good thing has also come to hurt Ballard Power prospects in the market. So far, the company is yet to hit the rights knots when it comes to targeting the market in a bid to target a wider market for its products.
In addition to targeting China for opportunities of Growth, the company also has sights on other markets. Late last year, the company received an order for the supply of a Fuel cell module for powering a U.K HydroFLEX Train from Porterbrook Leasing Company.
“As evidenced by this activity in the U.K., along with our work on fuel cell rail programs in Germany and China, momentum is rapidly building behind the development and deployment of Heavy Duty Motive fuel cell solutions for both inter-city trains as well as intra-city trams,” said CEO Jesper Themsen.
Standing in the way of Ballard Power, edging higher in the market is a string of disappointing financial results. The leading developer of fuel cell products took a hit on reporting revenues of $21.6 million in Q3, below analysts’ expectations of $31.3 million.
The Chief Executive Officer has already raised the red flag over the potential impact of new term headwinds arising from a material reduction in membrane electrode assemblies in China. The company has already trimmed its revenue expectations for FY2018 to between $90 million and $95 million from initial guidance of $121 million.
Fuel Cell faces an uphill task to take its fuel cell technology to a level where it is able to rival other alternative power options. However, the company has made impressive strides as it continues to refine its product line. Strong demand for its products to power trains as well passenger vehicles attests to the opportunity at hand.
After starting the year on a roll, the stock looks set to continue climbing high on improving fundamentals.
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Disclosure: We have no position in BLDP and have not been compensated for this article.