Nel ASA's Order Book Looks Solid on Paper, but Analysts See a Cash Crunch Looming in 2028

SB1 Markets reaffirmed its sell rating on Nel ASA and cut its price target to 0.30 NOK, citing an electrolyser glut and cash burn ahead of Q3 results.

Nel ASA has a habit of making headlines for the wrong reasons lately, and Tuesday brought another reminder of just how cautious the street has become on the Norwegian hydrogen equipment maker. SB1 Markets analyst Andreas Skeisvoll Grimsmo reaffirmed his sell rating on the shares and slashed his price target to 0.30 NOK from 0.50 NOK — a cut that lands as investors await the company's third-quarter interim report later this month.

The downgrade rests on structural concerns rather than any single quarterly miss. Grimsmo points to a glut in the electrolyser market, where supply continues to outstrip demand and keeps pressure on pricing. Against that backdrop, he estimates Nel commands only about 5% of the global market — a modest slice for a company that once pitched itself as a scale player in green hydrogen.

More troubling for the analyst is the absence of a credible route to operating profitability. On his numbers, the company's ongoing cash burn could force it to raise fresh equity as early as 2028 — a move that would dilute existing shareholders. SB1 Markets responded by cutting its EBITDA forecasts for the next two fiscal years by 29% and 41% respectively.

Submarine Contracts Fill the Pipeline, Not the P&L

The company's counterargument comes from the defense sector. Subsidiary Nel Hydrogen US has secured work from Collins Aerospace to manufacture PEM electrolyser stacks destined for life-support systems aboard U.S., British and French submarines, where the units generate oxygen for crews.

The total package, including smaller related agreements, comes to roughly USD 20 million. Within that figure sits one order worth about USD 12 million, a second valued at approximately USD 7 million, and a handful of smaller pre-orders. Nel will book the entire intake in the third quarter, but hardware deliveries are not scheduled until 2027 and 2028 — meaning the cash tied to these contracts won't reach the balance sheet for years.

That timing gap sits at the heart of the bear case. Until those revenues materialize, Nel must fund operations from its existing reserves, and it is precisely this stretch that has analysts questioning how far the company's liquidity can carry it.

What Friday's Close Tells Us

Nel shares finished Friday's session at EUR 0.1936, a muted gain of 0.3% on the day. The print leaves the stock 8.9% below its 200-day moving average of EUR 0.2125 — a technical signal that momentum has been fading for some time.

Attention now turns to the quarterly report due mid-month. Investors will be watching two things in particular: the pace of operating cash outflow and the size of the remaining financial buffer. Management will need to show how long current reserves can sustain the business before external funding becomes unavoidable. Only the detailed figures will reveal whether the skeptics' concerns about future capital needs are justified — or overdone.