ITM Power share: +20% after financial update - successful turnaround?

ITM Power share: +20% after financial update - successful turnaround?

According to a report by www.sharedeals.de, shares of British hydrogen player ITM Power (NASDAQ: ITM Power) are up over 20% after the company released promising financial details. This could be a positive turnaround for the company, but from an economist's perspective, there are still some concerns.

ITM Power produces integrated hydrogen energy solutions and is valued at around £400 million on the stock market. The latest financial data shows the company has made good progress, with expected half-year revenue of £7.5 million and a forecast half-year adjusted loss before interest, tax, depreciation and amortization (EBITDA) of £22-23.5 million. Still, ITM stock remains expensive relative to other pure hydrogen players, trading at 14 times consensus 2023/24 sales forecast.

Despite the positive developments, the economist points out that the company still faces tough competitive environments and turnaround challenges. The cash burn at ITM Power will continue for several years, which means that the cash balance will dwindle. Although today's financial update has restored management's credibility, there is still no talk of a real turnaround. A setback could quickly drop the stock to the valuation level of a Nel ASA, which represents about 50% downside potential.

Overall, from the economic expert's point of view, there are currently significantly more promising investments in the industry than the ITM share. For this reason, he recommends watching the sector from the sidelines and staying away from ITM stock.

It therefore remains to be seen whether ITM Power will be able to continue the positive developments and overcome the challenges in order to be successful in the long term.