Norsk Hydro (Sell, TP: NOK55.00) - Aluminium defying fundamentals

We reiterate our SELL and NOK55 target price, as we believe consensus EPS and aluminium price expectations are too high. We have seen aluminium prices outperform coal prices by 40% since the summer, defying the fundamental relationship where aluminium prices have been set by its cost of production for the past 15 years. We do not believe a balanced global supply/demand situation is likely to break this correlation. We have reduced our 2026–2027e EPS by 3% due to a stronger NOK versus USD. We est...

Norway: Best ideas Q1'25

Estimates up, share down — for how long?

Norsk Hydro (Sell, TP: NOK55.00) - Soft result in strong market

The Q4 headline results were weaker than consensus and our forecasts, and the proposed 2024 DPS of NOK2.25 was down 10% YOY despite record-strong alumina markets, with aluminium prices at cUSD2,600/t. We still expect aluminium prices to fall towards USD2,200/t as markets remain balanced while input energy costs decline globally, together with weak demand for downstream products. We have raised our 2025e EPS by 7% on high alumina and aluminium prices going into 2025 and 2026e by 1%. We reiterate ...

Underlying inline and cost coming down

Heads-up for report 14 February

Mr. Market too pessimistic?

Norsk Hydro (Sell, TP: NOK55.00) - Downside risk for aluminium prices

We expect EBITDA of NOK8.5bn, boosted by high alumina prices. We reiterate our SELL and NOK55 target price, as we believe aluminium prices of USD~2,700/t have been driven higher by speculation rather than fundamentals. Prices are inflated by high alumina prices, which should come down as more supply enters the market. Furthermore, we believe higher copper prices will not lead to higher aluminium prices for much longer, as the two metal prices do not share fundamentals. We have raised our 2025e E...

Limited incremental news

CMD next week

How long will it last?

Beat on cost, but cost will come back in Q4

Norsk Hydro (Sell, TP: NOK50.00) - Aluminium is not a scarce resource

We reiterate our SELL and NOK50 target price, as we expect aluminium prices to return to a fundamentals-backed level of ~USD2,200/t soon. Aluminium prices – in line with copper – have surged twice this year, but we stress that aluminium is not set to become a scarce resource – as may be the case for copper. Copper is a mined metal where the possibility of scarcity has led to a price surge of ~400% since 2000, while aluminium prices have been largely flat in the same period as bauxite is abundant...

Upstream strong, downstream weak

Norsk Hydro (Sell, TP: NOK50.00) - Small EBITDA miss and cost creep

In a soft Q2, EBITDA missed consensus by 5%. The main negatives were higher fixed costs (up NOK300m QOQ) as well as muted downstream demand and results. We have reduced our 2025–2026e EPS by 1% on higher fixed costs. We reiterate our SELL and NOK50 target price as we expect aluminium prices to fall back towards USD2,200/t, with no fundamental support for the recent bounce.

Sometimes the market gets it wrong

Q2 below, but a low-quality miss. EBITDA estimates down 3% for '24e, up 1% for '25/26e. Reiterate BUY – TP NOK 75.

EBITDA 5% below, divisional results in line

We like the equity case, despite high cons ests.

We expect Q2'24 EBITDA of NOK 6.0bn. Factset cons at NOK 6.5bn. Our EBITDA estimates are up by 3-6%. Reiterate BUY — TP NOK 75

Norsk Hydro (Sell, TP: NOK50.00) - Back to fundamentals-based prices

Our Q2 EBITDA forecast of NOK7.6bn is based on higher aluminium prices (results due at 07:00 CET on 23 July). However, as we do not believe the recent bounce was founded on fundamentals, after Q2 we estimate prices to decline towards USD2,200/t, as seen in March. Norsk Hydro’s NOK64 share price reflects too-optimistic aluminium prices, in our view, and we reiterate our SELL and NOK50 target price. We have raised our 2025–2026e EPS by 5% to account for higher alumina prices.

Norsk Hydro ASA: 1 director

A director at Norsk Hydro ASA bought 6,800 shares at 69.340NOK and the significance rating of the trade was 69/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearl...