Nel ASA Shares: A Tentative Rebound Amidst Persistent Challenges

Nel ASA NO0010081235

After an extended period of decline, shares of Norwegian hydrogen technology company Nel ASA have shown initial signs of finding a floor. The stock, listed on the Oslo exchange, recently posted a gain of just over 4%, closing at 2.30 NOK. This marked its strongest single-day performance in several weeks. However, the sustainability of this upward move is being questioned against a backdrop of continued weak fundamental performance.

The stock has been in a pronounced downtrend since mid-2024, falling from levels above 7.00 NOK to briefly trade under 2.30 NOK in early 2026. While the recent 4.26% advance suggests a potential shift in sentiment, it currently represents only a minor recovery within a weakened overall trend.

Key valuation and performance data include:
- Market Capitalization: Approximately 4.05 billion NOK
- 52-Week Range: 1.95 NOK to 3.61 NOK
- Year-to-Date Performance: +3.05%
- 12-Month Performance: +4.03% (compared to the OBX Index's +17.11%)
- Price-to-Book Ratio: 0.86

The company's significant underperformance relative to the broader OBX Index and its valuation discount to book value reflect ongoing market skepticism regarding its earnings prospects.

Underlying Fundamentals Remain Under Pressure

Despite the share price movement, the company's financial health continues to show strain. Nel operates deeply in the red, with several key indicators highlighting challenges:
- Profit Margin: -43.75%
- Trailing Twelve-Month (TTM) Loss: Roughly 459 million NOK
- Return on Equity (ROE): -9.42%
- Levered Free Cash Flow: Approximately -497 million NOK

The third-quarter 2025 report revealed a 17% year-over-year decline in revenue to 303 million NOK. More concerning was a precipitous 64% drop in order intake, which fell to just 57 million NOK. The order backlog stood at 984 million NOK at the quarter's end. This combination of falling revenue, sharply weaker new orders, and persistent negative cash flows underscores a difficult operating environment.

Analyst Sentiment: Predominantly Neutral to Negative

Evaluations from major financial institutions present a mixed but generally cautious outlook:
- Goldman Sachs: Neutral rating, with a price target of 2.20 NOK (January 20, 2026)
- Citi: Neutral rating, with a 2.70 NOK target (implying around 20% upside potential)
- Kepler Cheuvreux: Reduce rating, with a 1.90 NOK target
- Jefferies: Hold rating, with a 2.20 NOK target

On average, the 12-month price target has recently been lowered by 7.9% to about 2.23 NOK. Analysts cite reduced growth expectations and sector-wide headwinds for green hydrogen projects as primary reasons for the downward revisions.

Strategic Pivots and Recent Contract Wins

Securing EU Backing for Next-Gen Technology

In a significant strategic move, Nel reached a final investment decision in December 2025 to industrialize its "Next Generation Pressurized Alkaline" platform. The project is set to receive up to 135 million euros in support from the EU Innovation Fund. The goal is to develop a fully modularized, container-based system designed to significantly reduce the cost of hydrogen production.

Capital expenditures for this initiative are expected to span 2026 and 2027. A commercial rollout is planned for the first half of 2026, with platform scaling anticipated from 2027 onward.

New Orders Signal Ongoing Market Relevance

Even amidst sector-wide challenges, Nel has announced several new contracts in recent months:
- November 2025: A PEM electrolyser order for the HyFuel and Kaupanes hydrogen projects, valued at over 50 million US dollars.
- November 2025: Selection as the technology provider for the GreenH hydrogen projects in Kristiansund and Slagentangen.
- October 2025: A third order for a containerized PEM solution from H2 Energy.

These wins demonstrate that Nel remains a considered player in the hydrogen technology market, despite the overall decline in order intake.

Forthcoming Earnings as a Crucial Catalyst

The next major milestone for investors will be the release of fourth-quarter and full-year 2025 results, scheduled for February 26, 2026. This report will be critical in assessing whether recent capacity adjustments and strategic initiatives are beginning to translate into improved financial performance.

Trading below its book value and with secured EU financing for its next-generation technology, Nel possesses elements that could support an operational turnaround. However, risks persist, including potential delays in project execution and ongoing uncertainty in the green hydrogen market, which may continue to pressure margins. Consequently, the Q4 earnings report and management's forward guidance will be pivotal in determining whether the recent share price recovery can develop into a sustained trend.