There's that hydrogen again! This stock will double in value by 2025, according to analysts
Investment bank RBC Capital estimates that shares in AFC Energy, a company specialising in hydrogen fuel power generation technology, could more than double in the next year. Even so, they admit it is a risky bet.
AFC Energy and its potential
Founded in 2006 and listed on the London Stock Exchange,AFC Energy $AFC.L+2.2% makes hydrogen fuel cells for off-grid power generation in applications such as construction, mining and transportation. Despite the stock's decline from its all-time high in 2021, RBC Capital sees great potential in the company's continued business momentum, which is not reflected in the current stock valuation.
AFC Energy
AFC.LExpected growth
RBC analysts Erwan Kerouredan and Victoria McCulloch said in a June 11 research note that AFC Energy is on the cusp of significant growth. Although they have an "outperform" rating on the stock, they warn of "speculative risk." The investment bank expects the stock to rise 159% over the next 12 months to 40p per share, the most conservative price target among analysts. The average target price of the four analysts covering the stock suggests a rise of up to 282%.
Current funding and plans
AFC Energy announced this week that it has raised £15.8m by issuing new shares to fund its growth in electricity generation. The share price fell 18% following the announcement due to the discounted valuation of the new shares. The company plans to use the funds to build up its inventory and accelerate the delivery of its H-Power generators to customers.
Strategic partnerships
AFC Energy has entered into a three-year agreement with Speedy Hire to target the UK and Irish construction and emergency power markets under the Speedy Hydrogen Solutions brand. Another significant agreement is a partnership with Saudi Arabia's TAMGO, which will focus on the sale or rental of emission-free generators in the Middle East and North Africa region, including the NEOM project.
Outlook and capital deployment
Analysts at RBC Capital expect that a portion of the capital raised from the issue of new shares will be used to implement the partnership with Speedy Hire, while a significant portion of this capital will be directed towards TAMGO's contracts.
With the growing demand for clean energy solutions and strategic partnerships, AFC Energy has significant growth potential, according to RBC Capital, which is reflected in the bullish forecasts for its stock.
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Source: Yahoo Finance, CNBC, Bloomberg