Morgan Stanley Bets Big on ITM Power's Accelerated Path to Profitability

Morgan Stanley upgrades ITM Power to Overweight, nearly tripling its price target to 170p on faster breakeven and new Chronos platform, sending shares up 15%.

Morgan Stanley has thrown its weight behind ITM Power in a way the hydrogen sector hasn't seen in half a decade. The US investment bank upgraded the electrolyser specialist from "Equal-weight" to "Overweight" on April 29, 2026, nearly tripling its price target from 60 to 170 pence. It marks the first positive rating the bank has assigned to any hydrogen equipment maker in five years.

The upgrade sent the stock surging nearly 15% in German trading on Thursday, hitting €1.75 with volumes more than double the monthly average. The Relative Strength Index climbed to roughly 71 points, pushing the shares into technically overbought territory.

A Faster Route to Breakeven

Analyst Arthur Sitbon is betting on a significantly quicker turnaround than the broader market anticipates. Morgan Stanley now expects ITM Power to reach operational breakeven on an EBITDA basis in fiscal 2028 — a full year ahead of consensus estimates. The bank projects EBITDA of £13 million, while the rest of the Street has been forecasting a loss.

To hit that target, the company needs only around 200 megawatts of new orders, according to the analysts. That bar looks increasingly achievable given the momentum in the company's project pipeline.

Revenue Revisions and a Strong Balance Sheet

The bullish call rests on substantially higher revenue assumptions. Morgan Stanley sees sales reaching £169 million in fiscal 2028, compared with the market's £109 million consensus. The bank's base-case scenario values the company at nearly £1 billion.

Several factors underpin this optimistic outlook. ITM Power sits on a net cash pile of roughly £215 million, providing ample runway. Morgan Stanley also lowered its weighted average cost of capital to 9%, reducing the risk premium attached to the shares. The British government is chipping in £46.5 million in grants to support a new automated production line.

The Chronos Factor

A key catalyst is the new Chronos platform, an electrolyser that cuts the number of components in half and dramatically reduces manufacturing costs. This next-generation technology is central to the profitability story, promising a step-change in margins.

On the commercial front, ITM Power is supplying an electrolyser module for MorGen Energy's hydrogen project in Wales. The facility is slated to produce 2,000 tonnes of green hydrogen annually from 2028, with a long-term service agreement securing recurring revenue for the supplier.

Valuation and the Road Ahead

The market is now pricing ITM Power based on its project pipeline rather than current earnings. With a price-to-sales ratio above 35, the stock carries ambitious expectations. The strategic partnership with Rheinmetall continues to bolster investor confidence, even as the company remains operationally loss-making.

ITM Power closes its books on the just-ended fiscal year today. Management has guided for revenue between £40 million and £43 million, with final results due by the end of October. Those numbers will provide the first hard data point to test Morgan Stanley's thesis that the turnaround is arriving ahead of schedule. The next quarterly update is pencilled in for September 15, 2026.