ITM Power’s Worley Deal Ignites a Rally — but Analyst Targets Span from 60p to 200p

ITM Power hits yearly high after Worley alliance, but UBS maintains 60p target. Jefferies and Morgan Stanley upgrade, citing lower costs and break-even outlook.

The halving of analyst price targets is rare, but for ITM Power it has become the defining feature of its latest rally. The British electrolyser specialist hit a yearly high of 174.80 pence earlier this week after announcing a strategic alliance with engineering services firm Worley, only to give back some ground in a six percent pullback that left the stock at 184 pence. The retreat, which market observers describe as a classic consolidation, has not erased the underlying tension between bullish institutional calls and a sceptical UBS view that values the company at just 60 pence.

Trading volumes surged past 13 million shares on the day of the Worley announcement. The deal sees Worley integrate ITM Power’s Neptune V electrolyser into medium-scale hydrogen projects, a move that triggered an immediate 16 percent intraday spike. Jefferies responded by lifting its price target to 200 pence, citing lower capital costs and a favourable policy backdrop. Morgan Stanley upgraded the stock to overweight with a 170 pence target and expects the company to reach operating break-even by the 2028 financial year. UBS, however, held firm at 60 pence, warning that the valuation has run far ahead of the fundamentals.

Operationally, ITM Power is making progress. Management raised its revenue guidance for the current financial year to more than £40 million, with a growing order book now largely composed of contracts priced profitably. The balance sheet remains a source of comfort: nearly £200 million in cash and zero debt give the company a multi-year runway. Yet the pretax loss widened sharply in the most recent reporting period, underscoring the gap between top-line growth and bottom-line performance that fuels the bear case.

The wider clean-energy landscape offers both encouragement and caution. Plug Power, a US peer, reported quarterly revenue up 22 percent to $163.5 million, with electrolyser sales surging to around $41 million — a multi-fold increase from a year earlier. Its gross margin improved to minus 13 percent, signalling industry-wide cost progress. Globally, energy storage companies attracted $2.3 billion in the first quarter, of which $1.2 billion came from venture capital. Capacity transfers from project developers hit 7.2 gigawatts, more than triple the year-ago level. Siemens Energy lifted its annual outlook after a record order intake of €17.7 billion, though wind-turbine makers such as Vestas remain under pressure from expensive offshore installations.

In Britain, the state-backed National Wealth Fund is accelerating grid infrastructure upgrades. A giant vanadium flow battery recently went live in East Sussex, illustrating the kind of system-level expansion that will be essential for commercial electrolysis at scale. ITM Power has also been building its European footprint. Agreements with RWE and the Stablegrid Group in Germany cover planned projects totalling over 710 megawatts, while a partnership with Rheinmetall targets a continent-wide network for synthetic fuel production.

The next major catalyst is the decision by the UK subsidy authority on 26 May regarding a multi-million-pound grant for the Chronos production line. If approved, management intends to take a final investment decision in June. Chronos is billed as a technological leap: the next-generation electrolyser is designed to triple power output, cut costs by 40 percent, and sharply reduce weight and footprint. A positive ruling would provide the clearest signal yet that ITM Power is on track to scale its manufacturing capability.

Beyond the subsidy decision, other milestones are lining up. Results from the second UK hydrogen allocation round are due in the coming weeks, and a final investment decision on Uniper’s 120-megawatt Humber project remains on the table. For a stock that has already swung from 60-pence bear cases to a 200-pence bull target, these events will determine whether the rally has room to run — or whether the consolidation is merely a pause before a steeper correction.