Wall Street Has a New Favorite Hydrogen Investment

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Five out of five analysts rate Hyzon Motors shares a Buy.


Courtesy Hyzon

Wall Street—and investors—are still looking for high-quality hydrogen-economy investments. They may have found one in a start-up trucking stock.

Friday, Wedbush analyst Dan Ives launched coverage of

Hyzon Motors

(ticker: HYZN) with a Buy rating and a $10 price target. Shares closed at $6.55 on Thursday.

Hyzon stock is up about 2.3% in premarket trading, after the bullish call.

Hyzon is working to commercialize medium-duty and heavy-duty trucks that are powered by its hydrogen fuel cells. Hydrogen doesn’t generate any carbon dioxide—the main gas blamed for global warming—when burned or used in a fuel cell to generate electricity.

Producing hydrogen—the fuel for the fuel cell—can generate greenhouse gases if its produced by splitting up natural gas molecules. But if electricity from renewable power sources is used to make hydrogen from water then no greenhouse gases are emitted in hydrogen production or by the trucks.

Ives believes Hyzon has leading fuel cell technology, a legacy of the company’s relationship with its parent company Horizon, a fuel cell maker based in Asia.

Ives also believes Hyzon is ahead of the competition. The company will have about 500 fuel cell trucks on roads by the end of 2021. The rest of the industry has, essentially, zero.

With the new Buy rating, five out of five analysts covering Hyzon stock rate shares Buy. The average price target is more aggressive than Ives’ at almost $20 a share. In fact, Ives has the lowest price target at $10, but he is still bullish.

Only three of nine, or 33%, of analysts covering

Nikola

(NKLA), another hydrogen-based technology company, rate shares Buy. About 65% of analysts rate

Plug Power

(PLUG) share Buy. And 60% of analysts rate shares of

Ballard Power Systems

(BLDP) Buy. All four of these companies want to commercialize hydrogen fuel cell technology for commercial vehicle markets.

For now, analysts prefer Hyzon.

All four are valued based on sales and earnings far down the road. Hydrogen technology still isn’t being widely adopted. It’s expensive relative to traditional trucking powertrains. Nikola’s market capitalization is about $4 billion, Ballard’s is about $4.7 billion. Plug’s is the most valuable of the four with a market cap of about $15 billion. Hyzon’s market cap is the lowest at about $1.8 billion.

Hyzon projects about $3.3 billion in sales by 2025. What’s more, the company believes it will be producing positive Ebitda, short for earnings before interest, taxes, depreciation and amortization, by 2023.

Hyzon completed its merger with a special purpose acquisition company in July. Since then, shares are down 33%. The

S&P 500

and

Dow Jones Industrial Average

are up 3% and 2%, respectively, over the same span.

Write to Al Root at allen.root@dowjones.com

Roy Walsh

Roy Walsh

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