Is there a promising outlook, yet the question remains: should we go ahead and liquidate shares of Nel Asa at this time?
Nel ASA Stock Experiences Downgrade Amidst Weak Second-Quarter Results
Nel ASA, a Norwegian hydrogen company, has faced a setback with the downgrade of its stock due to weak second-quarter results, as reported by Bloomberg. This downgrade comes from both Danske Bank and JP Morgan, with the latter maintaining its rating for Nel ASA at "Underweight."
JP Morgan analyst Patrick Jones has cited the recent outperformance of the Nel stock as the reason for the lower target price, setting it at 10.10 Norwegian Kroner (NOK). This leaves little room for further gains in Nel ASA's stock price. Meanwhile, Danske Bank's analyst Joakim Pettersson has downgraded Nel ASA's stock from "Hold" to "Sell," setting a target price at 13 NOK.
The weak quarterly figures, including a 48% revenue decline in Q2 2025 and worsening losses, have raised concerns and highlighted operational and market challenges for the company. Such fundamental weaknesses tend to weigh on stock momentum and could limit how long the stock continues rising.
In fact, the recent downgrades likely reflect these concerns. The downgrade by JP Morgan could indicate a potential downward trend in Nel ASA's price, while the downgrade by Danske Bank is separate from JP Morgan's.
Despite the short-term rises recently, with an expected gain of about 19.7% over the next three months, there are indicators that the rise may be fragile. Falling trading volume on higher prices can warn of potential reversals shortly.
Given this mixed picture—technical short-term bullish trend but deteriorating fundamentals and analyst downgrades—the rise of Nel ASA stock may not be strongly sustained beyond a few months without improvements in the company’s revenues, order intake, or market conditions. The stock price fell by about 6.8% on August 1, 2025, indicating recent volatility and possible downward pressure.
Investors should monitor upcoming quarterly results and volume trends closely for signs of sustained momentum or weakening. For those interested in investing in the hydrogen sector, Euro Hydrogen Maxx Future, a certificate for investing in the entire value chain of hydrogen, is available for diversification. More details on Euro Hydrogen Maxx Future can be found at the provided link.
However, it's important to note that the long-term prospects for Nel ASA are described as promising. As the hydrogen market continues to grow, companies like Nel ASA could potentially benefit from this trend.
Despite the current challenges, it's crucial for investors to make informed decisions based on a thorough understanding of the company's financial performance and market conditions. The downgrade of Nel ASA's stock is likely to be short to medium term (weeks to a few months), with risks of reversal if the company’s financial performance does not improve or if broader market sentiment worsens.
In light of the downgrade by both Danske Bank and JP Morgan, investors might want to reconsider their finance decisions regarding Nel ASA stock, given the poor second-quarter results and operational challenges. As the hydrogen sector presents long-term growth prospects, those interested in investing can consider alternatives like Euro Hydrogen Maxx Future, which offers diversification across the hydrogen value chain.
