ITM Power’s High-Stakes Gamble: Retail Cash-Out vs Institutional Conviction Ahead of £46.5m Grant Ruling

The story of ITM Power in 2025 reads like a tug-of-war between two very different groups of investors. Retail holders who bought in at 30 pence and are sitting on gains of nearly 500% have been rushing for the exits, making the stock one of the most sold names on platforms like AJ Bell. At the same time, heavyweight institutions are doubling and tripling their price targets, and the shares have climbed almost 123% over the past twelve months. The result is a market that is both euphoric and deeply divided.

The immediate trigger for the latest wave of buying was a strategic alliance with Worley, the global engineering group, which will deploy ITM Power’s Neptune V electrolyser in medium-sized hydrogen projects. The stock jumped 16% in a single session, hitting 174.80 pence, with 13.2 million shares changing hands. That deal gives ITM access to external project portfolios rather than relying solely on its own developments, and it complements the work of its Berlin-based subsidiary Hydropulse, which builds and operates decentralised green hydrogen plants under long-term offtake agreements.

Analyst camps are miles apart

The split between optimism and scepticism is starkly visible on the sell side. Jefferies upgraded the stock to “Buy” and lifted its price target from 115 pence to 200 pence, citing lower capital costs and a more favourable political backdrop. Morgan Stanley followed with a similarly dramatic revision, raising its target from 60 pence to 170 pence — the first positive rating on a hydrogen electrolyser maker from that bank since 2021. Morgan Stanley expects ITM Power to reach EBITDA breakeven in fiscal 2028, a year ahead of consensus, with revenue of £169 million versus the market’s £109 million estimate.

UBS, however, remains firmly on the sidelines. The Swiss bank sticks with a “Neutral” rating and a 60 pence target, arguing that the current valuation already prices in fundamentals that have yet to materialise. On the face of it, UBS has a point: ITM Power trades at roughly 38 times sales, while its pre-tax loss widened to £45.4 million in the latest financial year.

Should investors sell immediately? Or is it worth buying ITM Power?

Insider moves and technical signals

Chief Technology Officer Simon Bourne added a layer of intrigue when he exercised options on 1.33 million shares from a 2010 grant at an average strike of 32 pence. He subsequently sold around 873,000 of those shares at an average of 157.44 pence — a transaction the company described as “sell-to-cover” to meet tax obligations. CEO Dennis Schulz, by contrast, is holding his 1.3 million shares, which are tied to performance targets and will expire if profitable contracts and the new Chronos production line fail to materialise.

Short sellers remain present but subdued, with the overall short interest just below 3%. The relative strength index hit 91.77 during the rally, a level that historically signals an imminent consolidation. And with the stock trading 117% above its 200-day moving average, the technical picture suggests the rally has already priced in a great deal of good news.

The operating story is improving — on the surface

Beneath the volatility, the business is showing genuine signs of progress. In the first half of fiscal 2026, ITM Power delivered a record £18 million in revenue, and management is guiding for more than £40 million for the full year, with an upper target of £43 million. The order book stands at £152 million, of which 71% is considered profitable. The company is also working through legacy contracts and focusing on economically viable deals.

The balance sheet provides ample runway. With nearly £200 million in cash and no debt, the market sees no immediate need for a capital raise before the end of the decade. Still, the pre-tax loss of £45.4 million underscores that profitability remains distant.

Everything hinges on May 26

The single most important date on the calendar is May 26, when the UK subsidy authority will announce its decision on a £46.5 million grant application for the Chronos production line in Sheffield. Chronos is designed to triple electrolyser output per unit and cut costs by 40%, and a positive ruling would trigger a final investment decision by management, expected in June 2026. The line would enable automated manufacturing with a capacity of one gigawatt.

ITM Power at a turning point? This analysis reveals what investors need to know now.

Beyond that, three other decisions loom: the outcome of the UK’s Hydrogen Allocation Round 2, a potential final investment decision on Uniper’s 120-megawatt Humber H2ub project, and the FID for the automated Chronos line itself. Each of these catalysts could either validate or undermine the current valuation.

For institutions that have just raised their targets, the real payoff is not expected until around 2028. Anyone selling now is betting that the stock has already discounted all of the good news. The next two weeks will go a long way towards determining which side of that bet is correct.

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ITM Power Stock: New Analysis - 16 May

Fresh ITM Power information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated ITM Power analysis...

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