The last 12 months have been a bit rough for the ITM Power (LSE:ITM) share price. The once-loved hydrogen power stock has suffered yet another blow to its valuation, with the stock falling by over 40%. That continues a downward trend that started in early 2021.
However, despite what this volatile implies, the underlying company’s finally starting to deliver tangible results. Revenue in the first half of its 2025 fiscal year (ending in April) almost doubled, from £8.9m to £15.5m year-on-year. At the same time, adjusted earnings have also slightly improved from a loss of £18.1m to a loss of £16.8m.
Clearly, the firm has a long way to go. However, with more customer contracts signed and impressive technological advancements achieved, this could be the beginning of ITM Power’s long-awaited comeback.
Reducing costs through innovation
Thanks to its REFHYNE II project with Shell and two new contracts signed for its NEPTUNE V electrolyser with German customers, ITM Power’s order backlog has just hit a record high of £135m. And with the hydrogen market in Europe starting to heat up, management has already announced demand’s rising, hinting that the order book has much further to grow throughout the rest of 2025.
Encouragingly, the group’s investments in research & development are also paying dividends. In November, ITM Power announced that it had found a way to reduce the amount of iridium its electrolysers use by 40% without sacrificing performance or durability. Why does that matter?
The German Mineral Resources Agency expects demand for iridium to surge between now and 2040. But it’s actually one of the rarest metals on the planet. Due to the complexities involved in its extraction, supply’s currently not expected to keep up, resulting in a commodity that could increase in price significantly over the coming decades.
By reducing ITM’s reliance on this element for its technology, the business may have just saved itself an enormous amount of variable expenses in the long run. And while it may take some time for the bottom line to reach the black, this is yet another step closer to profitability.
What’s around the corner?
Opinions from institutional analysts are a bit mixed. Of the 17 analysts tracking the business, three still believe the stock has further to fall, giving it a Sell rating, seven remain uncertain with a Hold rating, while the remaining seven either have the stock rated as a Buy or Outperform.
However, in terms of a share price target for the next 12 months, it seems the average consensus is that ITM Power will reach 61.5p, with one analyst believing the shares could rise as high as 105p by this time next year. That means, in the best-case scenario, a £1,000 investment right now could be worth £3,486 by March 2026.
Of course, a lot of things have to go right for such an impressive return to materialise. Full-year guidance for the remainder of ITM Power’s 2025 fiscal year suggests the second half has slowed in terms of revenue and earnings. And the full-year underlying loss is actually on track to be slightly larger than 2023’s $30.4m.
This might simply be a result of growing pains on the path to becoming a global hydrogen leader. But with a spotty track record of hitting targets, an investment right now comes paired with a lot of risk. Personally, that’s not something that tempts me, given the opportunities elsewhere in the markets right now.
