Analyst Divide Widens as Ceres Power’s Employee Share Plan Adds to Valuation Debate

Ceres Power shares surge 1,085%; analysts clash: Jefferies target 920p vs Peel Hunt 200p. Firm burns cash but eyes Endura royalty stream from 2027.

Ceres Power’s extraordinary twelve-month rally has thrown the analyst community into opposing camps. The stock has surged more than 1,085% over the past year, closing at 807.50 pence – a level 167% above its 200-day moving average. Yet the debate over what the shares are actually worth has never been more polarised.

Jefferies raised its price target in early May from 480p to 920p, maintaining a "buy" rating, citing confidence from the company’s capital markets day in April. Since that event the stock has added another 120%. Peel Hunt, by contrast, downgraded the shares to "sell" in April and assigns a discounted cash flow target of just 200p – far below the current price. The brokerage argues that a valuation of 14.3 times estimated 2026 sales is unjustified.

Into this heated debate comes a modest administrative move that nonetheless highlights the sensitivity around equity dilution. Ceres Power has applied for a block admission of 242,424 ordinary shares, due to take effect from 1 June. The shares are earmarked for the company’s long-term incentive plan and its Sharesave programme. In May, 746,992 shares from existing employee plans were already admitted for trading. As of 29 May, total voting rights stood at 195,782,718, with no shares held in treasury.

The move is not a conventional capital raising – it is an incentive mechanism for staff. Markets have taken it in stride, but at a time when the stock trades on a market capitalisation of roughly £1.6 billion, every additional share adds to the calculus of value.

Behind the rally lies a business that is still burning cash. Revenue for the 2025 financial year fell 37% to £32.6 million, while the net loss widened to £47.5 million. The company does, however, carry £83.3 million in cash and short-term investments, and has already secured contracted group revenues of around £45 million for its 2026 financial year before any new business is added. Planned cost reductions and the launch of a new platform are intended to accelerate commercial progress, with royalty income expected to scale more meaningfully from 2027.

That platform is Endura, a solid oxide stack rated at 10.8 kilowatts, capable of both power generation and electrolysis at operating temperatures between 450°C and 630°C. Ceres targets a market opportunity of 22 gigawatts by 2030, driven by industrial users, data centres and AI infrastructure. If just one partner scales Endura to 1 GW of annual production, management believes annual royalty revenues could reach £50 million to £100 million.

The production side is gathering pace. Delta Electronics is building a factory with 200 MW of capacity, due for completion this year. Weichai Power, Ceres’ largest shareholder, is constructing a 1 GW plant – the largest of its kind globally. In South Korea, Doosan Fuel Cell already operates a 50 MW facility for stationary systems, and its stock recently jumped as much as 25%. But Doosan is currently the only mass-production partner, a concentration risk that bears have seized upon.

A short seller report in March highlighted that Doosan has no confirmed external customers for Ceres’ solid oxide fuel cell systems, with deliveries limited to a related-party project. Peel Hunt subsequently cut its 2026 revenue expectations for Ceres. Jefferies acknowledges an asymmetric risk profile: a bear case implies a 46% downside, while a bull case offers 48% upside.

The broader demand backdrop remains supportive. Data centre electricity consumption rose 17% in 2025, and the average power requirement for new data centres is expected to reach nearly 110 MW by 2030, up from about 47 MW in 2025. Ceres has struck partnerships with Centrica for decentralised power, with Doosan in Korea, and with Weichai in China – the latter for SOFC stacks destined for Chinese data centres.

The average analyst price target across the Street stands at 620.56 pence, a full 23% below the current share price. That gap underscores the extent to which the stock has already run ahead of even the most optimistic forecasts. The summer interim update will be the next major test, revealing whether the contracted 2026 revenues are tracking as planned. For now, the shares are priced on a bet that commercialisation will outstrip the bearish arithmetic, not on the numbers in hand.