Ballard Power Systems has signed a new multi-year contract to supply 8 MW of engines to Stadler US. The engines are meant to go into its FLIRT H2, which after three years of joint collaboration with BLDP is the first Federal Railroad Administration (FRA) compliant hydrogen fuel cell powered passenger train in the U.S.

National Bank believes the order could generate between $6-8 million of revenue for Ballard and supports the company's efforts to diversify its end-market exposure. Analyst Rupert Merer, who currently forecasts $90 million in revenue for Ballard in 2025E, says this deal could drive some upside to estimates.

Rail also continues to be a bright spot for BLDP, with the announcement following a 20 MW order from Canadian Pacific Kansas City (CP.TO) last week.

"We view the development in the rail end market as a positive, and believe BLDP is successfully balancing its restructuring efforts while maintaining its leadership position in fuel cells."

National Bank is maintaining its Sector Perform/Speculative rating, US$2.50 target, "considering the slow adoption rate in the hydrogen market overall."