ITM Power’s June Crossroads: A Hydrogen Stock That Has Left Analysts Behind

ITM Power's 400% stock surge faces a June reckoning with a £120M manufacturing decision and £46.5M subsidy bid, as losses widen despite record revenue.

The numbers are almost absurd. A share price that has surged more than 400% over the past twelve months, yet the average analyst target sits nearly 45% below where the stock currently trades. ITM Power has become a battleground between market euphoria and valuation discipline — and the outcome of a single decision in June will determine which side is right.

The Rheinmetall Factor

The most powerful catalyst arrived in mid-April when ITM Power disclosed a partnership with German defence giant Rheinmetall. The collaboration centres on the Giga-PtX project, an ambitious plan to build a Europe-wide network of decentralised synthetic fuel plants for NATO forces. ITM will supply the electrolysis technology, with each facility capable of producing up to 7,000 tonnes of e-fuel annually from a 50 MW electrolyser. The initial focus is on the British market.

Rheinmetall has assembled a consortium for the project: Sunfire brings alkaline electrolysis know-how, Ineratec handles Fischer-Tropsch synthesis, and Greenlyte Carbon Technologies manages direct air capture of CO?. ITM’s role as the PEM electrolyser supplier places it at the heart of a defence-linked hydrogen play that has captured investor imagination.

The June Reckoning

But the real inflection point comes next month. ITM Power faces two concurrent decisions that will test whether its current valuation has any grounding in reality.

First, management must make a final investment decision on the Chronos manufacturing line in Sheffield. This facility is designed to produce PEM electrolysers with double the power density at significantly lower cost, targeting a capacity of one gigawatt by 2028. The price tag: £120 million.

Second, the company is awaiting the outcome of a state subsidy application worth £46.5 million, filed on 7 April under the UK’s Subsidy Control Act. If approved, the grant would be contractually secured in June, providing a substantial cushion for the Chronos investment.

CEO Dennis Schulz has been given a powerful incentive to deliver. Alongside regular long-term incentive plan awards, he received a one-off discretionary grant of 1.3 million shares tied to demanding targets — including profitable contracts and successful delivery of the Chronos project.

Revenue Growth, But Losses Mount

The operational picture is improving, though profitability remains elusive. For the first half of fiscal 2026, ITM Power reported record revenue of £18 million, driven primarily by equipment sales. Management subsequently raised full-year guidance to between £40 million and £43 million, up from the previous range of £35 million to £40 million.

The order book now stands at £152 million, with 71% of contracts deemed profitable — a marked improvement from the loss-making legacy projects that plagued the company. A capacity reservation agreement with RWE for 150 MW of Neptune V electrolysers, exercisable through 2027, adds further visibility.

Yet the losses are widening. The pre-tax loss for the year through April 2025 ballooned to £45.4 million from £27.1 million a year earlier. Analysts at Zeus Capital estimate the operating loss at roughly £30 million for the current period. Growth and red ink are running in parallel.

The Valuation Gap

Morgan Stanley stands out as the most bullish voice on the Street. The bank upgraded ITM Power to “Overweight” with a price target of 170 pence, and expects the company to reach EBITDA breakeven in fiscal 2028 — a full year ahead of consensus. According to Morgan Stanley, achieving that milestone would require roughly 200 MW of new orders.

The broader analyst consensus tells a different story. The average target sits at 84.60 pence, while the stock closed at 154.80 pence. That puts the share price more than 117% above its 200-day moving average — a level that typically raises fundamental questions.

On 30 April, the XETRA-listed shares gained 5.9% to close at €1.79, with trading volume of 868,037 shares well above the 30-day average of around 356,000. The relative strength index hit 70.88, signalling overbought conditions, though the average directional index of 53.57 suggests the uptrend remains structurally intact.

A European Pipeline Taking Shape

Beyond the UK, ITM Power is building a continental footprint. In Germany, agreements with RWE and the Stablegrid Group cover projects totalling more than 710 MW. The Rheinmetall partnership adds a defence dimension that few hydrogen companies can match.

Morgan Stanley values the enterprise at £993 million in a base-case scenario, and notes that net liquidity of nearly £198 million covers the current cash burn rate roughly five times over. That financial buffer buys time — but not indefinitely.

The June decision on Chronos will reveal whether the market has simply run too far ahead of the fundamentals, or whether ITM Power’s growth story has the substance to justify its stratospheric valuation. For a stock that has already delivered a 365% gain year-to-date, the stakes could hardly be higher.