Morgan Stanley Upgrades ITM Power, Raises PT to 170p on Profitability Outlook

Why It Matters

The upgrade signals growing confidence in the hydrogen OEM sector and positions ITM Power as a near‑term profit‑center, likely attracting fresh capital as the UK accelerates its hydrogen infrastructure rollout.

Key Takeaways

• Morgan Stanley lifts ITM Power target to 170p ($2.13) per share.
• Forecast expects FY28 EBITDA breakeven with £13m ($16m) profit.
• FY28 revenue projected at £169m ($211m), 54% above consensus.
• Enterprise value set at £993m ($1.24bn) with strong cash cushion.
• New 1 GW Chronos line FID slated for June 2026.

Pulse Analysis

The hydrogen economy is moving from pilot projects to commercial scale, and ITM Power sits at the heart of the UK’s electrolyser supply chain. Morgan Stanley’s upgrade marks the first overweight rating in the hydrogen OEM space since 2021, reflecting the broker’s belief that the company’s technology and project pipeline are finally aligning with market demand. By raising the price target to 170 pence, the firm acknowledges a sharper risk profile, underpinned by a lower weighted‑average cost of capital and a more optimistic view of long‑term market share.

Financially, the analyst team projects a dramatic turnaround. FY 28 EBITDA is expected to swing to a modest £13 million profit, up from a consensus loss of £4 million, while revenue is forecast at £169 million—about $211 million—representing a 54% uplift over peers’ estimates. The upgrade hinges on a handful of catalysts slated for 2026, including the final results of the UK’s Hydrogen Allocation Round 2, a potential investment decision on Uniper’s 120 MW Humber H2ub project, and the final investment decision for a new 1 GW Chronos manufacturing line in June. Only roughly 200 MW of new orders are needed to hit breakeven, a target the firm appears well‑positioned to meet.

For investors, the revised valuation places ITM Power’s enterprise value at roughly $1.24 billion, with net cash of £215 million (≈$269 million) covering five times its current cash‑burn rate. This robust liquidity, combined with a projected 4% share of the 2050 electrolyser market, suggests the company could capture significant upside as Europe tightens its carbon‑neutral targets. The upgrade may catalyze broader capital inflows into the hydrogen sector, reinforcing the UK’s ambition to become a global hub for clean‑energy technology.