Nel ASA at a Critical Juncture: Can New Contracts Fuel a Rebound?

Nel ASA, a prominent player in the hydrogen sector, finds itself at a pivotal moment. A significant new domestic contract has injected a dose of optimism, yet the company's share price, traded on the Oslo exchange, continues to grapple with formidable technical resistance levels. The central question for the market is whether this recent order can finally catalyze a sustained recovery or if the stock remains vulnerable to further downward pressure.

The company's financial situation presents a complex narrative for investors. On one hand, Nel ASA possesses a substantial cash reserve of approximately 1.8 billion NOK, providing a robust financial buffer. This war chest offers the company significant ammunition to continue scaling its production capabilities despite a challenging market environment.

However, this strength is tempered by the lingering effects of its Q3 earnings report. The figures revealed a decline in revenues and a weaker order intake compared to the previous year, leaving a mark on investor confidence. Consequently, every new contract announcement is now scrutinized for its potential to generate immediate revenue. A glimmer of positive news emerged from the same report: despite the top-line contraction, the EBITDA margin showed improvement. This suggests that internal cost-cutting measures and stricter financial controls are beginning to yield results.

Strategic Domestic Partnership

A key development capturing investor attention is the finalized cooperation with GreenH. In this strategic move, Nel ASA will act as the technology partner for two major hydrogen projects located in Kristiansund and Slagentangen. The core of the agreement involves Nel supplying electrolyzers with a combined capacity of 20 MW.

This partnership extends beyond a simple transaction; it strategically embeds Nel deeper within Norway's energy infrastructure. Following a period of inconsistent order flow, this contract serves as a much-needed stabilizer. The market interprets this as a concrete signal that the company's technology is gaining traction in its home market and will be supported for the long term.

Should investors sell immediately? Or is it worth buying Nel ASA?

Technical Battle and Market Sentiment

From a technical analysis perspective, the stock is navigating turbulent conditions. It is currently engaged in a tough struggle with its 200-day moving average, a key technical indicator often watched for signs of a long-term trend reversal. The pronounced volatility around the 2.30 NOK (approximately 0.20 EUR) price level reflects a market fraught with indecision.

While the GreenH order and another project, the 50-million-USD HyFuel initiative in Kaupanes, provide fundamental support, the overall weakness in the hydrogen sector continues to act as a significant cap on the stock's upward potential. The situation is coming to a head for shareholders: the critical test is whether the share price can firmly hold the 2.30 NOK level. A sustained breakout above this zone is considered by many analysts to be a mandatory prerequisite for a genuine trend reversal.

The primary focus now shifts to execution. The market will be watching closely to see if Nel ASA can efficiently convert these strategic contract wins into recognized revenue in the upcoming quarters.

Key Takeaways for Investors:
* Price Level: Shares are contending with a key resistance level near 2.30 NOK.
* Order Momentum: Secured a 20 MW electrolyzer supply agreement for GreenH projects.
* Financial Buffer: A strong liquidity position of around 1.8 billion NOK secures operational continuity.
* Market Focus: Cautious sentiment prevails, with attention on the execution of the existing PEM order backlog.