Ballard shares rocket skyward on Bush talk of hydrogen future
Chris Sorensen, Financial Post
Published: Tuesday, April 25, 2006
Investors in hydrogen fuel-cell maker Ballard Power Systems Inc. are once again betting the future is now after U.S. President George W. Bush touted hydrogen-powered vehicles as "an attainable goal" during a weekend Earth Day speech.
Shares of the Burnaby, B.C.-based company, climbing steadily since January amid rising oil prices, skyrocketed 22% yesterday, with trading volumes reaching their highest level in nearly five years. Shares closed at $14.20, up $2.56, on the Toronto Stock Exchange.
Investors appeared to be reacting to statements made by Mr. Bush on Saturday after a speech that stressed the need to reduce the dependence of the United States on foreign oil.
"I strongly believe hydrogen is the fuel of the future," Mr. Bush said. "I believe that today's children will one day take their driver's test in a hydrogen-powered, pollution-free car. It's a big goal, but it's an attainable goal."
But while Ballard has promised to demonstrate it can produce a commercially viable hydrogen fuel cell by 2010, analysts say it is unlikely people will be zipping around in environmentally friendly hydrogen-powered vehicles any time soon.
"The technology works, but it's far too expensive," said MacMurray Whale, an analyst at Sprott Securities, who has a "reduce" recommendation on Ballard's shares. "And even if they manage to make a cost-effective fuel cell, the biggest problem is finding a way to make hydrogen available and cheap. It's all about product and not about technology."
Mr. Whale said that the resurgence in interest in Ballard's shares, which have lost almost 90% of their value over the past five years, is part of a "puzzling" long-term trend that has seen mainly retail investors react to rising oil prices by sinking their money into companies like Ballard that are developing alternative fuel technologies.
He also noted that Ballard received an 11% bump in its share price earlier this year after CNBC's Jim Cramer mentioned the company on his popular Mad Money television show.
It's not the first time investors have been whipped into a frenzy over the prospect of a hydrogen economy. Ballard's fuel-cell technology, which uses hydrogen to create electricity and produce only water as a by-product, captured the imagination of investors around the world in the late 1990s and its shares hit a dizzying peak of $172 in September, 2000, before sliding to $4.30 last May.
Although several automakers are still betting heavily on hydrogen-powered vehicles -- Ford Motor Co. and DaimlerChrysler AG recently bought Ballard's systems-integration division and General Motors Corp. has promised a fuel-cell vehicle in showrooms by the end of the decade -- critics argue the technology remains too costly to be adopted on a large scale by the auto industry.
Moreover, unlike the gas-electric hybrid vehicles currently being produced by automakers, early adopters of hydrogen technology will not be able to pull up to neighbourhood service stations and fill up their cars since there is very little infrastructure for hydrogen production and distribution in North America.
In part, that's why Ballard, which posted a loss of US$16.1-million in the fourth quarter, has shifted its focus to applications it believes it can make money from in the near term. That includes working with other companies to make fuel cells to power forklifts used by warehouse operators. Although more expensive than conventional battery-powered forklifts, the fuel-cell versions require less maintenance and have a life-span up to three times as long.
Nevertheless, the Holy Grail remains automobiles. Fuel-cell proponents say a combination of geopolitical pressures, increased environmental awareness and concerns about the reliable access to fossil fuels has put the prospect of hydrogen-powered vehicles on people's radar.
"These are all real drivers and they are stronger now than they've ever been before," said John Tak, president and CEO of Fuel Cells Canada.
Quelle:
http://www.canada.com/nationalpost/financialpost/...-e39ba7e9876b&p=2