Nel ASA: A Hydrogen Order Boom That Can't Outrun the Balance Sheet

JPMorgan slashes Nel ASA price target 38% to NOK 1.80 as record order intake fails to offset falling revenue and widening losses.

The Norwegian hydrogen equipment maker finds itself in an unusual spot: its order intake is hitting records while its income statement keeps deteriorating. That contradiction is now front and center for investors, and it has prompted JPMorgan to take a sharply more cautious view of the stock.

The bank cut its price target on Nel ASA by 38% to NOK 1.80, down from NOK 2.90, while keeping a "Neutral" rating. The move reflects a widening gap between the company's record order intake and its declining recognized revenue — a divergence that has defined the debate around the shares since the summer.

Record Orders, Shrinking Revenue

Nel's second-quarter 2026 results, published on July 15, laid the tension bare. Revenue fell 11.79% year over year to NOK 153.41 million, down from NOK 173.92 million in the same period last year, with a loss per share of NOK 0.10. Total revenue including other income came in at NOK 182 million. Meanwhile, order intake jumped 224% year over year to NOK 230 million — a surge initially celebrated as a potential turning point. The PEM electrolyzer segment, based on proton-exchange membrane technology, accounted for 96% of new orders.

But JPMorgan sees this as the crux of the problem: orders fill the pipeline but don't yet translate into revenue or profit. Electrolyzer projects typically have a longer lag between contract signing and revenue recognition than conventional industrial production — a reality that tests investor patience while weighing on near-term results.

The order backlog climbed to NOK 1,213 million, up 9% from the first quarter, with the PEM backlog growing by NOK 147 million to NOK 990 million in a single quarter. The alkaline business, by contrast, was nearly stagnant, with just NOK 8 million in new orders against a backlog of NOK 224 million.

The Cash Burn Widens

The operational picture is less encouraging. EBITDA swung to a loss of NOK 155 million, deepening from NOK 100 million in the first quarter and NOK 86 million in the year-ago period. Part of that deterioration came from a one-time settlement: on June 8, Nel agreed to pay NOK 70 million to Iwatani Corporation of America to resolve a long-running legal dispute. That payment is now off the table, but the underlying operational weakness — falling contract revenue and margin pressure — remains.

Still, the company has a financial cushion. Cash and cash equivalents stood at NOK 1,328 million at quarter-end, providing time to execute its plans. Nel is also pushing ahead with its new pressurized alkaline platform, the PA-Series, which the company says will cut floor space requirements by 80% and investment costs by 40% to 60%. The company targets manufacturing capacity of 500 megawatts by end-2026, expanding to 1 gigawatt in 2027, backed by EU funding of EUR 135 million for the PA-Series line.

Leadership Transition Adds Uncertainty

Adding to the complexity is a change at the top. CEO Håkon Volldal announced his resignation on June 15 to take a leadership role at a packaging company. He remains in place during a six-month notice period while the board searches for a successor. A leadership transition at a time when order intake and financial results are moving in opposite directions raises the bar for clear strategic direction.

What to Watch Next

The stock has shown resilience despite the analyst cut, trading at EUR 0.1992, up 1.53% on the day, though it remains nearly 10% below its 50-day average and about 45.50% off its 52-week high from late May. Over twelve months, the shares are modestly lower, though they have gained since the start of the year.

The central question for the coming quarters is whether Nel can scale its PEM technology profitably. The order momentum suggests demand is picking up, but a growing backlog doesn't guarantee profitable execution. If margin pressure persists and the operating loss widens beyond second-quarter levels, investor skepticism is likely to continue. The next test comes with the third-quarter report on October 21, when the market will look for signs that the order trend is holding and that margins are starting to stabilize.