Nel ASA's Q1 Report to Test Rally Amid New Order and Analyst Caution

A new $7M electrolyzer order lifts Nel's shares, but its Q1 2025 report must prove order growth can drive stable revenue and address asset risk.

A fresh $7 million order for its US subsidiary has given Nel ASA a pre-earnings boost, but the Norwegian hydrogen technology firm faces a critical test this week. The company’s first-quarter report, due Wednesday, must demonstrate whether a recent surge in order intake can finally translate into stable revenue and clarify a looming asset risk.

The order, a repeat purchase from French firm Mesure Process, a subsidiary of energy infrastructure provider Synqo Energies, involves containerized PEM electrolyzers for a European project. Nel Hydrogen’s modular MC platform, designed for rapid installation, will supply hydrogen fueling stations and industrial applications, with the plant slated for operation in 2027. "This repeat order underscores our ability to build recurring customer relationships in this segment," said CCO Todd Cartwright, pointing to supportive market dynamics.

Investors welcomed the news, pushing shares sharply higher in a volatile trading week. On the Frankfurt exchange, the stock closed at €0.22 on Friday, marking a daily gain of over 6% and a weekly advance of roughly 12%. The price now sits about 12% below its 52-week high but has widened the gap to its recent low to nearly 21%.

This momentum arrives just ahead of a pivotal earnings release. Nel will publish its Q1 2025 figures at 07:00 CET on April 22, followed by an investor presentation an hour later. The market’s focus will be squarely on operational progress and the conversion of the firm’s order backlog.

The backdrop remains challenging. For the full year 2025, Nel’s revenue fell 31%, with a net loss of NOK 1.27 billion driven by write-downs. While order intake in Q4 2025 showed a significant jump to approximately NOK 686 million, total revenue for that quarter still contracted by 20%. A key uncertainty is the valuation of two idled production lines at Nel’s Herøya plant in Norway. The company is reviewing their book values, and further write-downs are possible—a risk the Q1 report should quantify.

Simultaneously, Nel is betting on its future. The company has made a final investment decision to build up to 1 GW of production capacity for a new, more cost-effective alkaline platform at the same Herøya site. The technology is projected to be up to 60% cheaper to manufacture than current systems. This project is backed by up to €135 million from the EU Innovation Fund, with a commercial launch planned for the first half of 2026.

Analysts maintain a cautious stance. Morgan Stanley recently slashed its price target from NOK 3.50 to NOK 2.00. Citi sees a fair value of NOK 2.40, while Berenberg analyst James Carmichael reiterated a "Hold" rating with a NOK 2.30 target. Carmichael highlighted unpredictable revenue conversion and the unproven nature of the new technology platform as core risks.

In a recent governance shift, Nel’s shareholders approved a new compensation model at the annual meeting in early April. The old stock option program, which lacked performance requirements, was replaced with a performance-share plan featuring clear criteria. Notably, CEO Håkon Volldal voluntarily surrendered 1.5 million existing options, receiving in return nearly 3.5 million performance-based share units subject to a three-year lock-up period—a move signaling management’s commitment to aligning with shareholder interests.

The coming days will reveal if the recent order-driven rally has a firmer foundation. The quarterly results must address the persistent gap between orders and revenue while providing clarity on asset impairments, setting the tone for Nel’s ambitious and costly technological transition.