NEL ASA shares have recently been on an upward trend, driven by future expectations. Now investors seem to be coming back to reality.
• NEL stock pauses upward movement
• Imagination through new electrolysis platform
• Analysts remain skeptical due to losses and weak order situation
NEL ASA shares rose by a whopping 6.45 percent to NOK 3.22 on the Oslo stock exchange on Friday. On Monday, the trend that has driven NEL shares up by around 40 percent in the last four weeks appears to be continuing: the stock temporarily gained 2.8 percent to NOK 3.31 in Oslo.
The market launch of the new platform for alkaline electrolysis, which could significantly reduce the production costs for green hydrogen, has been particularly popular among investors. According to the company, the platform is expected to enable a total turnkey cost of less than $1,450 per kilowatt for a 25-megawatt facility. This means that NEL is positioned well below the current industry-standard costs of many electrolysis projects. Gradually, however, the fantasy among investors seems to be giving way to the reality that experts have been pointing out for a long time.
NEL ASA between technology promise and reality
As investors pushed NEL shares higher in recent weeks, research firms warned that technological advances alone are not enough. The ability to convert these innovations into profitable projects is crucial. This is exactly where many market observers see NEL’s biggest weakness so far: commercial scaling has so far fallen short of expectations.
NEL ASA again recorded losses in the most recent reporting quarter and also had to accept a decline in sales. Experts also criticize the weak order development. Declines in incoming orders and overall volatile demand for electrolysers would have significantly limited the visibility of future sales. At the same time, dependence on government funding programs remains a structural risk that is taken into account critically in many analyst models.
Analysts remain cautious
The current analyst consensus on NEL ASA is currently mostly in neutral territory; there have been no buy recommendations in the last 12 months. The latest analyst opinion comes from the Canadian bank RBC, which left the hydrogen company at “Sector Perform”. Analyst Colin Moody criticized the weak order and sales development in the most recent quarter and wrote that the market recovery is still a long time coming. He therefore no longer sees any upward potential for the NEL share; his price target of NOK 3 is below the current share price level.
The RBC analysis exemplifies the consensus among many experts: Many analysts currently do not see sufficient momentum in incoming orders to support the market’s ambitious growth expectations and justify the current price level. The NEL share therefore remains a classic example of a future value whose valuation depends heavily on hope and political conditions – and less on current operational business.
Carolin Ludwig, Martina Köhler, editorial team finanzen.net
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