Ceres Rises Following Positive Numbers Update

Shares of Ceres Power Holdings plc experienced a 20% surge on Friday after the company released its first-half results, which showcased strong financial figures and confirmed its positive trajectory for the year.

Analysts at RBC Capital Markets described the report as robust, noting that the financial results met expectations and provided a reassuring outlook for investors.

The company reported a revenue of £28.5 million for the first half of 2024, falling within the guidance range of £27-29 million. Additionally, a gross margin of 80% exceeded the anticipated range of 75% to 80%, further highlighting Ceres’ operational efficiency.

Though cash and short-term investments decreased by 10% to £126.1 million from £140 million at the end of 2023, this decline was expected. Analysts noted, “This is a solid update, with signs of liquidity strengthening. The numbers reflect good progress for 2024, with earnings aligning with guidance and showing strong sequential improvement.” They also pointed out a planned 15% reduction in expenditure for the fiscal year, aimed at reinforcing Ceres’ financial stability and competitiveness.

Importantly, Ceres reaffirmed its full-year revenue guidance of £50-60 million, with analysts estimating that the company would achieve £57 million for the year.

Despite some uncertainties, particularly regarding the partnership with Weichai Power, analysts deemed the overall commercial activity to be solid. While RBC Capital Markets continues to hold an “underperform” rating on the stock due to long-term concerns about Ceres’ royalties-based business model, they acknowledged the positive developments in recent commercial announcements.

However, caution remains, with analysts highlighting uncertainties around key partnerships and revenue channels. The price target has been established at 160p, reflecting a mix of optimism about Ceres’ position in the fuel cell and electrolyser markets, along with concerns over potential risks, such as the challenges partners may face in scaling production and the competitive landscape in the growing green energy sector.