For ITM Power, the Next Fortnight Could Determine Whether the Rally Has Legs

ITM Power faces a make-or-break week: a £46.5M subsidy ruling and MSCI Small Cap inclusion test its 400% rally. Analysts are split, but record revenues, a £152M order book, and £197.8M cash provide a buffer.

The British electrolyser maker ITM Power is charging into a make-or-break two-week stretch. On May 26, the UK subsidy authority is set to rule on a £46.5 million grant for the company’s upcoming Chronos production line, and just three days later, on May 29, its shares will join the MSCI UK Small Cap Index. The twin events come on the heels of a stunning 400% twelve-month gain — a run that has left analysts deeply split on whether the stock still has room to run.

At the heart of the improvements is a shift in how ITM recognises revenue. The company now books income based on project progress rather than waiting for final delivery milestones. That change alone has made the underlying business more visible to the market and helped underpin the raised revenue guidance: management now expects £40 million to £43 million for the current financial year, representing an 11% uplift at the midpoint. First-half revenues already hit a record £18 million, while the order book stands at £152 million, with 71% of contracts now considered profitable.

The MSCI rebalancing will force passive funds and ETFs tracking the UK Small Cap index to buy the stock, adding technical demand on top of the recent rally. But the index entry is not the only institutional catalyst. Jefferies recently lifted its price target from 115p to 200p and kept a buy rating, citing upward earnings revisions and a lower discount rate. Morgan Stanley went further, forecasting 2028 revenues of £169 million — 54% above consensus — in what it called its first positive call on a hydrogen equipment maker since 2021.

Yet not everyone is convinced. UBS maintains a 60p target and a neutral rating, warning that the current valuation has run far ahead of fundamentals. Even Jefferies acknowledges an asymmetric risk-reward: its bear case implies a 52% downside, while the bull case offers only 37% upside. The sharp divergence underscores the uncertainty surrounding the sector, which has historically rewarded big visions but punished weak execution.

Stabilising the picture is a cash pile of roughly £197.8 million, giving the company more than three years of runway without needing to tap equity markets. That buffer provides breathing room for the Chronos automated production line in South Yorkshire, which will have an annual capacity of 1 GW. A positive subsidy ruling on May 26 could trigger a final investment decision in June, accelerating the plant’s development and strengthening ITM’s ability to deliver on standardised platforms such as the 50 MW ALPHA 50 and the 5 MW NEPTUNE V.

Beyond the near-term catalysts, CEO Dennis Schulz is repositioning the business away from bespoke small-scale projects toward large, repeatable installations for heavy industry and synthetic fuels. A recent collaboration with Rheinmetall on the Giga PtX project — aimed at building a Europe-wide network of synthetic fuel plants for NATO forces — adds a defence angle that barely existed a year ago. Still, profitability remains distant: EBITDA losses are forecast at £27 million to £29 million for 2026, with Jefferies not expecting a break-even until 2028.

For now, the market is betting that operational discipline and clearer visibility will sustain the momentum. The subsidy verdict and the MSCI inclusion will provide the first real tests of whether the 400% rally is built on more than hope.