Nel (Sell, TP: NOK7.00) - Valuation due for a reality check
We forecast Q4 EBITDA of NOK-182m, just better than consensus of NOK-190m. The EU recently adopted new rules stating what can be classified as green hydrogen. This gives much-needed clarity for the industry, but the strict rules could also slow the European rollout of green hydrogen. For 2023e, we believe Nel can perform well on its alkaline product line (already expected by consensus). Meanwhile, we expect capital markets to gradually acknowledge the softness in PEM and fuelling, and that the valuations of these segments will decline. The shares continue to appear overvalued to us fundamentally and versus peers. The peer group EV/sales indicates a fair value of cNOK8–9/share for Nel, c50% below its share price. We reiterate our SELL and NOK7 target price.NEL ASA develops diagnostic tests for early detection of diseases. Co.'s patented method is based on identifying disease-specific gene expression signatures from sample materials, such as blood. Co.'s products in development phase include MCItect, for patients with Mild Cognitive Impairment (MCI) aimed to detect Alzheimer disease within two years prior to onset of dementia, and ADtect, for the detection of mild to moderate Alzheimer disease, as well as one project in discovery phase, namely AMYtect, for brain amyloid detection.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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