After Neil’s quarterly presentation on Thursday, several brokerages lowered the company’s target price on Friday. Norn are the only ones who adapt.
The quarterly report showed that revenue ended at NOK 229 million and operating profit before depreciation and amortization (EBITDA) ended at minus NOK 113 million.
It was expected upfront revenue of NOK 183 million and negative operating profit before depreciation and amortization (EBITDA) of NOK 120.3 million, according to estimates obtained by Bloomberg.
The backlog of orders shrank from NOK 1.08 billion at the end of the second quarter to NOK 1.01 billion at the end of the third quarter.
After the stock price rose above 20 percent on Thursday, the stock fell again by 10 percent on Friday afternoon.
The decrease in the backlog of orders is causing concern
Despite the fact that Niels’ turnover beat both the Sparebank 1 Markets estimates and the consensus estimate, the increased costs meant that operating profit came in roughly where the brokerage firm had expected. They believe that the backlog of orders from the previous quarter is worrisome.
Their estimates currently assume a total volume of 1.5 times the current order book by the end of 2022, but in an update Friday, the brokerage wrote that this is too high unless order intake increases sharply in the coming months.
Sparebank 1 Markets reiterates its sell recommendation and target price of NOK 8 per share. However, they are asking investors with short positions to exercise caution at the start of the first quarter, as the decision on funding from Important Projects of European Common Interest (IPCEI) will be finalized, which could further increase order intake. IPCEI are innovative projects in selected industrial areas that require coordinated efforts across borders. The projects will boost investment in Europe and enhance Europe’s competitiveness in the long run.
To DN, analyst Thomas Dowling Næss at Sparebank 1 Markets said the numbers from the quarterly update weren’t too high given the backlog of orders was low.
– First of all, Nel delivers a better-than-expected streak, EBITDA slightly above our estimate and slightly below consensus. But it’s important to remember that consensus has fallen a lot, so all the numbers aren’t very encouraging given that the backlog of orders is down, Dowling Ness said Thursday.
Many brokerages are lowering the target price
DNB Markets also reiterates the sales recommendation, writing in an update that the 21 percent increase after a neutral quarterly report is due to short-term coverage and some players’ enthusiasm for the sales turnover.
On Friday afternoon, the stock was trading at just over 15 NOK. It rates the company with a market capitalization of NOK 22 billion.
DNB lowered its estimate for 2022 due to a lack of current orders and in its 2023 estimate based on “general stagnation” in the hydrogen sector, lowered its target price to NOK 9 per share from NOK 10 per share.
According to an update from Pareto Securities on Friday, good turnover and still sluggish reception mean they are relatively neutral for the quarterly report. Pareto repeats his sell recommendation and lowers the target price to NOK 7 per share from NOK 8 per share.
Norne writes in an update that Nel’s third-quarter report was solid, with good sales returns and reassuring commentary on the future prospects. Norn thinks Neil is well positioned to secure a large percentage of the larger contracts, but it may take time before they materialize. However, Norne believes Nel can afford to wait for these projects, with NOK 2.9 billion in cash at the end of the third quarter.
Norne raises its target price to NOK 22 per share, from NOK 20 per share, and reiterates its buy recommendation.
Berenberg also reiterates the company’s buy recommendation, lowering its target price to NOK 21 per share, from NOK 23 per share previously. In an update on Friday, they wrote that they expect to implement major projects and contracts through 2022, despite the fact that 2021 has been a slow year for orders in the hydrogen sector.
Like Norne, Berenberg notes the marked increase in potential projects, which according to Neil are worth $6 billion. This is about doubling the value that Neal mentioned on Capital Market Day in January.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We want you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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