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(Sharecast News) - Berenberg has upped in price target on Ceres Power on growing investor interest in fuel cell technology.
The bank said it expected Ceres, a fuel cell specialist, to be a "long-term winner" of the clean energy transition. It upped its price target to 1,560.0p from 1,540.0p and reiterated its 'buy' rating for the Aim-listed stock.
Berenberg, which is also Ceres' broker, said investors had become increasingly focused on hydrogen during 2020. "Yet unlike prior spikes in interest, this time we are confident it is here to stay," the bank argued. Hydrogen is the most common fuel used in fuel cell technology.
It continued: "Our traffic light system suggests nearly all major factors supporting hydrogen growth have the green light. This includes changes to government policies, corporate investment, the geopolitical backdrop, hydrogen technology and renewable energy costs amid a growing climate crisis.
"As such, we believe hydrogen will be a reality this time round, with Ceres one clear winner of the transition."
Berenberg concluded: "We believe the current share price implies Ceres achieves sales of £400m by the end of 2035. Our demand-based and new bottom-up supply side modelling suggests it could be £750m-£1.2bn from the fuel cell business alone.
"When including the electrolysis opportunity, we envisage scenarios that generate more than 200% upside to the current share price."
As at 1415 BST, shares in Ceres were ahead 7% at 1,200.o6p.
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