While some analysts are questioning Ballard Power Systems’ soaring stock price, the company’s CEO says the rally is justified.

Ballard shares have been one of the top performers on the TSX this year, nearly tripling in price. Investors having been reacting positively to company announcements such as a $175-million investment from a Chinese automotive and equipment manufacturer, announced in August.

British Columbia-based Ballard makes environmentally-friendly hydrogen fuel cells used to power buses, trucks and trains.

While its shares have been soaring, some analysts doubt the rally is justified by fundamentals. Craig Irwin at Roth Capital calls the stock “egregiously overvalued”, pointing to its share price multiple of 17 times the company’s revenue.

In an interview on BNN Bloomberg, Ballard CEO Randy MacEwen said there’s more to the story.

“If you’re looking at today’s revenue, and looking at a multiple, you’re going to have problems with the valuation,” he said. But MacEwen highlighted the potential of large bus, truck, rail and marine markets, where Ballard can use the same technology (and in some cases the same product) to win sales. MacEwen sees those markets driving revenue growth of about 30 per cent over the next few years, and then a “very steep slope of growth in 2025 onward.”

The analyst at Roth Capital also notes that Ballard has yet to turn an annual profit. However Ballard’s CEO says that reflects the company’s priorities. “We could be profitable next year if we weren’t investing in R and D, if we weren’t investing in customer experience,” MacEwen said. “But our goal is not just to be a leader today, and 10 months from now, but 10 years from now. So we’re making a significant investment so we’re in a leadership position with high market share. … We see profitability coming into the lens in the 2021-2022 time frame.”

MacEwen says the key to the recent growth of the fuel cell industry is improvement in technology, reduction in product costs, and new government regulations requiring reduced emissions for vehicles.