Berenberg hikes target price on ITM Power

(Sharecast News) - Analysts at Berenberg lifted their price target on ITM Power from 110p to 200p on Tuesday, saying the group's partnership with Rheinmetall on the Giga PtX project representeed a "significant growth opportunity" as the it pushes into fresh endmarkets.

Berenberg said the Rheinmetall collaboration centres on a different use case to traditional greenhydrogen applications, with a focus on energy security for armed forces rather than decarbonisation. It stated green fuels offered a resilient alternative to diesel and kerosene in defence and other missioncritical sectors where electrification was not viable, and stated Giga PtX could become a major market for largescale hydrogen production.

ITM has been opening new markets and diversifying its potential bidding pipeline, with Berenberg highlighting Rheinmetall's estimate that the project could ultimately involve up to 1,500 plants. Using a conservative average of 25MW per site, the broker said this implies around 37.5GW of electrolysers - a "significant opportunity" for ITM to expand its future pipeline and for Giga PtX to anchor the next phase of its growth.

Berenberg added that ITM's PEM electrolysis technology could form the blueprint for pilot plants that, over the next five years, build towards "several hundred decentralised plants" of up to 50MW each. ITM's product line, including the ALPHA 50, the world's first fullscope 50MW plant, was described as well suited to this demand and offering a long runway for future orders.

"Given the significant long-term growth drivers and opportunities, we adjust our long-term forecasts while leaving our near-term estimates broadly unchanged. We roll forward our valuation with our price target increasing to 200p and we reiterate our 'buy' recommendation," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com