The ITM share price: Exciting adventure or impending doom?

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Key points

  • FY 2022 interim revenue is more than 20 times higher than the previous year
  • The company recently received a £9.4 million grant from Green Hydrogen for Scotland
  • In February 2022, Credit Suisse lowered its price target from 340p to 235p

After falling 56% since the same time last year, the ITM Power (LSE: ITM) The share price obviously disappointed current shareholders. Nevertheless, by developing electrolyzers to safely extract hydrogen from water, the company has become a major player in the green energy market. Attracting the attention of many governments, the company has recently seen an increase in revenue and a reduction in losses. But I want to know if the company is really a wise investment for my wallet. Let’s take a closer look.

Optimism for ITM share price

There have been a number of recent exciting updates involving the company. In January 2022, the company sold a 24 megawatt (MW) electrolyser to Norwegian company Linde Engineering. This should start generating revenue in fiscal year 2023.

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In the same month, the German Ministry of Education granted the ITM funding of 1.95 million euros for the development of hydrogen. This is part of a larger German initiative to increase the amount of energy produced from hydrogen. Additionally, the Green Hydrogen for Scotland initiative awarded the company £9.4m in November 2021. It also appears Scotland is keen to explore the possibility of hydrogen.

In sum, ITM’s share price could benefit from further steps taken by countries to transition to greener forms of energy. Financial services company Jefferies recently raised its ITM share price target to 800p, due to the company’s activity in this sector.

Recent results

In a recent business update for the six months to October 31, 2021, the company announced a fundraising of £250m. This will fund the construction of a second UK factory in Sheffield and its first overseas operation.

Despite this expansion, Swiss credit cut its target ITM share price from 340p to just 235p. It was mainly because he thought switching to greener energy “could favor alkaline and solid oxide technologies”. Such a drop in the price target is concerning, mainly because Credit Suisse believes that the future of hydrogen energy may not be very bright.

Despite this, however, recent results seem to point in the right direction. For the period, ITM’s revenue reached £4.1 million. This is a big improvement on the same period in 2020, when earnings were just £200,000. Additionally, losses have started to narrow to £2.4m from £2.8m in the same period of 2020.

There is some excitement in the ITM share price, inspired by recent agreements with governments. Although revenues are improving, they are still tiny compared to the company’s market capitalization of £1.4 billion. For now, I think I will avoid buying shares of this company. But I will leave open the possibility of buying at some point in the future if the results continue to improve.

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Andrew Woods has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks mentioned. The opinions expressed on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we give in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of information makes us better investors.

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