Ceres Power fell as much as 13% after Panmure Liberum downgraded the stock to sell from buy. The broker argued the 244% year-to-date rally has priced in manufacturing capacity growth unlikely to materialize at the pace the market assumes. The new price target of 590p implies about 14% downside from the prior close.
Ceres Power Holdings PLC fell as much as 13% after Panmure Liberum cut the stock to sell from buy, arguing the 8x rally has outpaced commercial realities.
"The market has got ahead of itself," analysts Alex O'Hanlon and Oliver Swift wrote in a note, raising their price target to 590p from 475p while downgrading the rating two notches.
The stock, which surged 244% year to date and 8 times over the past 12 months to reach a market cap of 1.4 billion pounds, now prices in manufacturing capacity growth that is unlikely to materialize at the pace the market assumes, the broker said. Panmure estimates that confirmed manufacturing partners have capacity of only around 400 megawatts by 2030, well short of the 1.7 gigawatts the current valuation implies.
The downgrade highlights the gap between Ceres' proprietary solid oxide fuel cell technology — which the broker still believes in — and the company's ability to commercialize it through third-party manufacturing partners. Panmure pointed to Doosan Fuel Cell's experience as a cautionary template, noting that early production yields at the South Korean company's new 50-megawatt facility ran below 50% in late 2025 before recovering to around 80% by the first quarter of 2026, still short of the 90% management target. Doosan's balance sheet compounds the concern, with net debt rising to 285 million pounds and debt to equity jumping from 221% to 264%, potentially limiting its ability to accelerate capacity investment.
The broker also questioned the "time to power" thesis that has animated the sector, arguing that conventional gas turbine order backlogs of three to four years point to delayed rather than unavailable supply, with competitive pressure likely to intensify from around 2028 as that backlog clears. Panmure added that solid oxide fuel cells face a structural disadvantage in North America, where low wholesale electricity prices reduce the economic value of their efficiency advantage over conventional gas turbines. Upfront system costs are estimated at around $3,500 per kilowatt against $1,000 to $1,400 per kilowatt for combined-cycle gas turbines.
The bear case in the note implies a zero equity value if partners fail to commercialize successfully, while the bull case, which assumes partners scale to around 5 gigawatts of capacity by 2035, implies a valuation of 2.3 billion pounds. The broker said the market is currently pricing a 63% probability of the bull case, a significant increase from the 40% implied when it last examined the framework in November, and one it regards as too optimistic.
The analysts cautioned against betting on a decline, saying that "given share price has been sentiment driven, it is too risky to short." The decline puts the stock at its lowest since the downgrade, testing investor conviction in a name that has been one of the UK's best-performing stocks. Ceres' next catalyst will be any update from its manufacturing partners on production yields and capacity expansion timelines.
This article is for informational purposes only and does not constitute investment advice.
