Nel ASA Faces a Defining Quarter as JPMorgan Cuts Its Target and the Order Book Finally Swells

JPMorgan trims Nel ASA price target to NOK 1.80, citing weak margins and slow backlog conversion; shares fall below key moving average.

The gap between what Nel ASA is selling and what it is actually booking as revenue has become the central tension for investors in the Norwegian hydrogen specialist. JPMorgan's latest move underscores that concern: analysts at the US bank trimmed their price target on the stock to NOK 1.80 from NOK 2.10 on Wednesday, while keeping an "Underweight" rating in place. The rationale, according to the bank, is persistent margin pressure and a slower-than-expected conversion of the company's order backlog into recognised sales.

That cautious stance lands amid a stretch of uneven trading for the shares. On Monday, Nel's stock dropped 6.03% to NOK 2.18, erasing the prior session's 9.02% gain and pushing the equity below its 38-day moving average. In German trading on Wednesday, the shares closed at EUR 0.1972, down 0.50% on the day, while the secondary listing showed a slightly steeper decline of 0.91% to EUR 0.1964. Over the past month, the stock has shed 5.19%.

The chart tells a story of a company that has fallen a long way from its highs. The 52-week peak of EUR 0.3655, set in May, now sits roughly 46% above the current price — one source puts the distance at 46.05%, another at 46.27%. At the other end, the 52-week low of EUR 0.1731 from late February offers a cushion of about 13.46%. Technical indicators are not flashing alarm bells: the relative strength index hovers around 40.6 to 41.2, a neutral-to-soft reading that suggests neither oversold conditions nor an imminent reversal.

A Quarter of Contradictions

The fundamentals behind the share price weakness emerged in the second-quarter report, published in mid-July. Revenue from customer contracts fell 12% year on year to NOK 153 million, down from NOK 174 million in the same period of 2025. EBITDA swung to minus NOK 155 million, weighed down by a one-off charge of NOK 70 million tied to a legal settlement with Iwatani Corporation of America, an agreement reached in early June that resolved all outstanding litigation between the two companies.

The order side of the ledger, however, tells a very different story. Incoming orders surged 224% to NOK 230 million in the quarter, propelled chiefly by demand for PEM electrolysers. The total backlog swelled to NOK 1.213 billion by the end of the quarter, a 9% increase from the first quarter. That divergence — falling revenue alongside a rapidly filling pipeline — is precisely what JPMorgan flagged in its assessment, and it is likely to remain the key metric for analysts in the quarters ahead.

There is also the question of cash. Nel's liquidity position has thinned considerably, contracting from NOK 1.928 billion to NOK 1.328 billion year on year. That drawdown, combined with the widening gap between backlog growth and actual revenue recognition, gives the bears ample material to work with.

Cost Discipline and a New Platform

Nel has not been idle on the operational front. Following the spin-off of Cavendish Hydrogen, the company has streamlined its cost base, reducing headcount from 430 to 313 employees, as management confirmed in a late-July conference call. The company is also pushing forward with its "PA-Series" platform for pressurised alkaline electrolysers, unveiled in May, which targets turnkey costs of under USD 1,450 per kilowatt for 25-megawatt installations — roughly half the industry standard of around USD 3,000 per kilowatt.

Leadership uncertainty adds another layer of complexity. Håkon Volldal stepped down as President and CEO in June, intending to move outside the hydrogen sector, and remains in post during a six-month notice period while the board searches for a successor. Late last month, it emerged that Volldal will take the helm at packaging group Elopak once that period concludes.

Brussels and the Road Ahead

For the near term, attention shifts to Brussels. The European Commission is expected to announce the results of its "HORIZON-JU-CLEANH2-2026" funding programme in early August, a scheme for which 170 green hydrogen production and storage projects have been submitted. Nel has already secured a commitment of up to EUR 135 million from the EU Innovation Fund, and a positive outcome could provide a short-term catalyst for the shares.

The company has also said it will stop formally collecting and publishing analyst estimates, citing a decline in the number of participating analysts. An automated valuation model currently projects a net loss of NOK 0.29 per share for the full year 2026, a deterioration from an earlier estimate of NOK 0.257.

All eyes now turn to October 21, when Nel presents its third-quarter results. The question investors will want answered is whether the swelling order book can finally translate into tangible revenue growth — or whether the gap JPMorgan has identified will continue to define the stock's trajectory.