Time to Exit Gerresheimer? TKMS Earns a Buy Rating as HPQ Silicon Attracts Growing Interest

HPQ Silicon: Interest from Potential Industry Partners

HPQ Silicon is an interesting small-cap stock. After about ten years of research and development, the Canadian technology company is on the verge of commercialization. Specifically, in three areas simultaneously: silicon anode material for batteries, fumed silica, and decentralized hydrogen production.

The latest news comes from the fumed silica sector. HPQ Silicon is consistently driving forward the commercialization of its proprietary Fumed Silica Reactor (FSR) technology. FSR technology is a specialized production process for manufacturing fumed silica. This is an extremely fine, nanoscale silicon dioxide (SiO₂) powder used as a high-performance additive in numerous industries.

Following successful pilot trials, the company considers the transition from the development to the commercialization phase to have been achieved. On a pilot scale, commercial-grade fumed silica was successfully produced directly from quartz. An independent validation of product quality, a Memorandum of Understanding for a planned production facility with an annual capacity of 1,000 metric tons, and a comprehensive technical review reinforce confidence in the technology's economic viability.

The positive results have significantly increased interest from potential industry partners. According to the company, ongoing discussions now extend beyond the originally planned collaboration. HPQ and its subsidiary HPQ Silica Polvere are exploring various strategic options to maximize the long-term value of the FSR technology. These include joint ventures, licensing models, royalty-based production partnerships, and proprietary production facilities.

The partnership with PyroGenesis is also progressing. Both companies are in the final stages of a transaction under which PyroGenesis is set to acquire a 50% stake in HPQ Silica Polvere while remaining the exclusive equipment supplier for the commercialization of FSR technology. For HPQ CEO Bernard Tourillon, the successful pilot program marks a decisive turning point. What began as a development project has evolved into a scalable industrial platform that, thanks to independent validation, robust engineering data, and growing industry interest, is paving the way for widespread commercial use.

For investors, the key point is that with FSR technology, HPQ is not only producing a new material but also developing a potentially disruptive manufacturing process. If commercialization is successful, the company could tap into the multi-billion-dollar market for pyrogenic silica with a more cost-effective and efficient production process. Against this backdrop, the company's current market capitalization of approximately CAD 70 million appears to have significant upside potential, especially since this is not HPQ's only exciting product. More in the video:

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TKMS: Estimates Raised

Things are going well at TKMS right now. While shares of Rheinmetall, Renk, and others are struggling this year, TKMS is up over 17%. The stock is currently trading at around EUR 81. In particular, the well-filled order book is fueling positive sentiment. Most recently, the company reached a historic milestone by being selected as the preferred bidder for the Canadian submarine program. The project encompasses up to twelve conventional Type 212CD submarines. Including maintenance, repair, and armament, the total program could exceed CAD 60 billion, according to estimates by mwb analysts. Even though the final contract is not expected until the end of 2026, the award significantly bolsters the already record-high order backlog and secures capacity utilization well into the 2040s. At the same time, analysts believe TKMS is establishing itself as a leading Western supplier of conventional submarines and is entering the North American market for the first time.

Against this backdrop, the experts have raised their medium-term expectations. In addition to the Canadian project, they see further potential in the expected order for up to eight F128 frigates for the German Navy. For the period through 2032, analysts now anticipate average annual revenue growth of 13%, up from the previous 11.9%.

For 2026, analysts expect revenue of EUR 2.27 billion, EBITDA of EUR 233 million, and earnings per share of EUR 1.84. In 2027, revenue is expected to rise to EUR 2.54 billion, EBITDA to increase to EUR 278 million, and earnings per share to reach EUR 2.19. For 2028, mwb has adjusted its forecast based on the latest orders. Revenue expectations have been raised from EUR 2.86 billion to EUR 3.04 billion. Analysts at TKMS now expect EBITDA to reach EUR 357 million, up from EUR 344 million, and earnings per share to be EUR 2.74 in 2028.

The price target was raised from EUR 125 to 135, and the "Buy" recommendation was confirmed. In mwb's view, the Canadian order had hardly been priced into the share price so far, implying further upside potential despite the contract still awaiting signature.

Gerresheimer: Shares Recover, but Analysts Remain Cautious

And what is Gerresheimer up to these days? Following accounting issues, the delayed submission of the annual report, speculation surrounding the BaFin audit, and changes to the executive board, things have recently quieted down somewhat for the packaging specialist serving the pharmaceutical and cosmetics industries. On the stock market, the stock has even managed to recover noticeably in recent months. In early April, the stock was trading at EUR 17. It has since climbed back above EUR 28. However, in mid-2023, the price had already reached around EUR 120.

From the perspective of analysts at mwb research, the crisis at Gerresheimer is far from over. They remain skeptical, pointing to the company's persistently high debt, outstanding regulatory risks, and weak earnings quality.

Although the company has finally presented its audited 2025 annual report after months of delay, thereby removing one source of uncertainty, the analysts' fundamental concerns remain. Governance, accounting, refinancing, and debt continue to dominate the investment case. While revenue of EUR 2.321 billion was slightly above the previous estimate of EUR 2.309 billion, the financial results were significantly weaker, with earnings below revenue. Reported EBIT came in at EUR -209 million, versus the expected EUR -125 million, while the net loss was EUR -319 million, versus the expected EUR -179 million. The results were weighed down, among other things, by higher depreciation and amortization, impairment charges, extraordinary expenses, increased financing costs related to the Bormioli acquisition, and a lower tax benefit.

Analysts view it as particularly critical that the BaFin audit has not been concluded but has instead been expanded. In addition to the already known issues regarding revenue recognition, particularly in connection with bill-and-hold agreements, further topics are now being investigated. These include lease liabilities, disclosures regarding the useful lives of intangible assets, and potential impairments in the Advanced Technologies division. The 2025 half-year report is also undergoing additional scrutiny. As a result, analysts believe that regulatory risk has increased rather than decreased. At the same time, the balance sheet remains strained. Net debt rose to EUR 2.0 billion from EUR 1.1 billion in the prior year, and the adjusted EBITDA-to-debt ratio climbed to 4.95x. Starting November 30, 2026, a strict debt ceiling of 4.75x and a minimum liquidity requirement of EUR 100 million will apply again. A violation could trigger early repayment obligations. Therefore, the planned sale of Centor is viewed as a necessary step toward debt reduction.

Overall, analysts' assessment remains clearly negative. The release of the annual report is not seen as a clean slate but rather as a confirmation of increased equity and credit risks. The price target remains at EUR 12.50. As a result, analysts currently rate Gerresheimer shares as a "Sell".

Gerresheimer shares have been a solid money-maker in recent months. However, as the mwb study correctly points out, the risks remain. Therefore, the stock is, at best, a speculative investment. HPQ is reporting one success after another. It can really only be a matter of time before the stock breaks out of its sideways trend and moves higher. TKMS is currently the most successful German defense contractor. However, shareholders should always take into account the complexity of shipbuilding.