Broker tips: Atome, Ceres Power
By Iain Gilbert
Date: Monday 15 Apr 2024
(Sharecast News) - Analysts at Canaccord Genuity initiated coverage on Atome with a 'speculative buy' rating and 130.0p target price on Monday, stating the company's choice to focus on finished ammonia fertiliser manufacture was "advantaged".
"Fertiliser is high-value, strategic, tradeable and fungible, and manufacturing it from electricity, water and air (rather than natural gas) gives a completely different cost, security of supply and sustainability profile," said Canaccord Genuity.
In the short term, it expects the company to progress its lead project in Paraguay to put all of the elements for a final investment decision in place later this year, something the analysts expect to be "a material value realisation" event for Atome.
"We believe its strategy of going downstream to monetise island power opportunities is both highly attractive and likely to be followed by other companies on other electricity-driven projects worldwide," added the Canadian bank.
"We expect the next valuation event to be announcements on offtake and debt on the project, expected 2Q 24. We base our valuation on a risked net asset value, which we believe is the most straightforward approach for development companies."
Analysts at Berenberg kept their recommendation for shares of Ceres Power at 'buy' following the company's full-year results.
Their 800p per share target price was also unchanged.
In their opinion, the developer of power generation and hydrogen technology outfit's latest numbers were 'neutral', although operational progress in the fuel cell (SOFC) and electrolyser units (SOEC) was described as "solid".
One potential negative however was the company's indication that Bosch sales might be slower than expected.
"In our view, Ceres has made good progress against a difficult backdrop for the industry and we remain positive about the long-term outlook for its differentiated technology and high-margin licensing business model."
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