The Three Catalysts Driving ITM Power's Resurgence — and One Critical Hurdle

ITM Power shares rally 160% YTD as Morgan Stanley and Jefferies raise targets; EU hydrogen grant and UK's May 26 subsidy verdict on £46.5M grant are key catalysts.

A trio of forces has propelled ITM Power into the spotlight: two major analyst upgrades, a fresh injection of European hydrogen funding, and a pending UK subsidy decision that could reshape its manufacturing capabilities. But with the stock already up around 160% since the start of the year, the rally faces its most concrete test on 26 May, when Britain’s Subsidy Advice Unit delivers its verdict on a £46.5 million grant for the company’s Sheffield production line.

The shares jumped 4.64% on 11 May, touching multi-year highs and briefly testing the 170 pence level — precisely the price target that Morgan Stanley had just slapped on the stock. That upgrade, from “Equal-weight” to “Overweight”, with the target more than doubling from 60p to 170p, was driven by the investment bank’s belief that ITM could reach EBITDA break-even as early as the 2028 financial year. For a sector where the path out of losses is often more important than top-line growth alone, that earlier-than-expected inflection point has triggered a significant re-rating.

Jefferies went even further, hoisting its price objective from 115p to 200p while maintaining a “Buy” rating. The bank cited higher earnings estimates and lower discount rates, underpinned by greater project visibility and a friendlier policy backdrop. Jefferies forecasts £41 million in revenue for the current financial year, climbing to £71 million by 2028 — the same year it expects ITM to turn EBITDA-positive. Yet not every analyst is on board: Berenberg sticks with a 110p target, while UBS remains cautious at just 60p.

The macro tailwind comes from the European Hydrogen Bank, which awarded a conditional €422.75 million grant to MorGen Energy for the Njordkraft project in Esbjerg, Denmark. The wider auction round (IF25), which closed in February 2026, was heavily oversubscribed — 58 bids totalling around €8.4 billion sought to secure support for 1.1 gigawatts of electrolyser capacity. ITM already works with MorGen on the West Wales Hydrogen project in Milford Haven, where its modular POSEIDON platform is expected to be deployed. While the company has no confirmed role in Njordkraft, the existing partnership puts it closer to real projects than it was just a few quarters ago.

On the domestic front, the UK government’s Department for Energy Security and Net Zero (DESNZ) has already committed to an £86.5 million financing package, including a £40 million equity investment from Great British Energy. The remaining £46.5 million, structured as a grant, is now subject to a review by the Subsidy Advice Unit. If the report proves favourable, ITM will be one step closer to building a fully automated production line in Sheffield with an annual capacity of one gigawatt, centred on the next-generation Chronos electrolyser stack. That investment decision could come as early as June.

Operationally, ITM is making progress even as it burns through cash. In the first half of the 2026 financial year, it posted a record £18 million in sales, and management now expects full-year revenue of £40-43 million. The order book sits at £152 million, with around 71% of contracts now classified as profitable. But the pre-tax loss widened to £45.4 million in the year to April 2025 from £27.1 million a year earlier, leaving a cash buffer of roughly £198 million to fund the ramp-up.

Meanwhile, an industrial partnership with Rheinmetall adds another string to the bow. The Giga PtX project aims to build a decentralised network for synthetic fuels across Europe, with each unit capable of up to 50 megawatts of electrolysis. The application targets defence and critical infrastructure — a niche that could open long-term demand.

All of this has made ITM one of the most heavily traded stocks on major UK retail platforms, but the expectations are sky-high. The 26 May subsidy advice will either validate the recent re-rating or introduce a dose of reality. Without the grant, the rally becomes more dependent on a steady flow of new commercial orders — and the gap between political support and actual contracts remains the industry’s defining challenge.