ITM Power’s Wild Ride: From Profit-Taking Plunge to Analyst Upgrade

ITM Power shares rebound 14% after retail profit-taking, boosted by Morgan Stanley's upgrade to Overweight and a 170p price target, as hydrogen firm nears EBITDA breakeven.

The shares of ITM Power have been on a rollercoaster that would make even seasoned traders dizzy. After a staggering 400% climb from 30 pence to a multi-year high of 166.50 pence, the stock hit a rough patch as retail investors rushed to lock in gains. But the correction was short-lived. On Wednesday, the hydrogen specialist’s shares surged more than 14% to 148.15 pence, clawing back much of the lost ground.

Retail Exodus Meets Institutional Endorsement

The selling pressure had been intense. At broker AJ Bell, ITM Power was the most-sold stock last week, with one in every fifty sell orders targeting the company. That wave of profit-taking briefly pushed the market capitalisation down to around £1 billion. Yet the dip proved to be a buying opportunity for those with a longer horizon.

Morgan Stanley stepped in with a powerful vote of confidence. The bank upgraded ITM Power from “Equal-weight” to “Overweight” and nearly tripled its price target from 60 pence to 170 pence. The catalyst? A belief that the British electrolyser manufacturer will reach EBITDA breakeven a full year earlier than the market expects — in fiscal 2028 rather than fiscal 2029. The analysts now forecast EBITDA of £13 million for FY28, against a consensus loss of £4 million, and revenue of £169 million, a 54% premium to the £109 million consensus estimate.

Operational Momentum and Strategic Pivots

Behind the volatility lies a genuine operational turnaround. ITM Power posted a record first-half revenue of £18 million, prompting management to lift its full-year revenue guidance to as much as £43 million. The company is still loss-making, with an expected operating loss of around £28 million for the year, but the trajectory is improving.

Two strategic wins have supercharged the narrative. In early April, the company secured an £86.5 million government grant to build a new automated production line. Then came a partnership with Rheinmetall to develop synthetic fuels for NATO — a move that blends green hydrogen with defence spending. The dual pivot has given the stock a powerful tailwind.

A Valuation That Demands Delivery

The stock’s current price reflects high expectations. Morgan Stanley’s sum-of-the-parts valuation puts the enterprise value at roughly £993 million, with a bull case of 300 pence and a bear case of 50 pence. Berenberg, meanwhile, recently lifted its price target from 100 pence to 110 pence, maintaining a buy rating based on the improved revenue outlook.

ITM Power’s balance sheet provides some cushion. The company holds net liquidity of £215 million, enough to cover its cash burn rate about five times over, reducing the immediate need for a capital raise. Morgan Stanley also lowered its weighted average cost of capital from 11% to 9%, reflecting a more stable view of the company’s financing.

The Next Catalysts

The stock has more than doubled since the start of the year, but the next leg of the rally depends on execution. Three events could provide the next trigger: the results of the UK’s Hydrogen Allocation Round 2, a final investment decision on Uniper’s 120 MW Humber H2ub project, and the FID on ITM Power’s own 1 GW Chronos production line, expected by June 2026.

Morgan Stanley has set a clear threshold: an order intake of 200 MW would be enough to reach EBITDA profitability. Whether that materialises depends on how many of these projects reach decision-ready status. By summer, the picture should be much clearer. For now, the market is betting that ITM Power can deliver — and the price tag reflects that conviction.