Ballard Power's Woes Continue

Apr.26.07 | About: Ballard Power (BLDP)

Ballard Power Systems Inc. (NASDAQ:BLDP) recently received bad news after client General Hydrogen Corp. delayed forklift fuel cell orders pending its possible acquisition by Plug Power Inc.

As a result, Ballard's six-month old contract with General Hydrogen, which is supposed to contribute US$22 million in revenue for 2007-2008, is at risk, according to RBC Capital analyst Stuart Bush.

"[Ballard] indicated it was entering contract renegotiations with General Hydrogen that we believe will result in less favourable terms and reduction in unit shipments (2,900 was the original agreement)," he said in a note to clients.

And that's not the only problem facing the fuel cell manufacturer. Mr. Bush said the company continues to burn cash at a high level and he doesn't anticipate profitability until 2010.

He doesn't believe the current share price, which closed at US$5.51 on Wednesday matches the company's commercial outlook and he reiterated his "underperform" rating and left his US$4 price target unchanged.