Pareto has downgraded its recommendation for aluminum producer Norsk Hydro to Hold from Buy, while simultaneously raising its price target to NOK 117 (116).
The research house points to continued strength in aluminum markets characterized by low inventories, rising premiums, and an expected deficit through approximately 2027.
For the second half of 2026-2027, Pareto has raised its aluminum price assumptions and subsequently lifted earnings per share forecasts for 2026-2027 by 9 percent and 7 percent, respectively. This places the estimates 6-20 percent above consensus.
Despite this, Pareto believes much of the positive development is already priced in. The stock is estimated to reflect an average aluminum price of around USD 3,200 per tonne through 2030, while the price target indicates only limited upside from current levels. Consequently, the research house has opted to adopt a more neutral stance.
Norsk Hydro ASA is one of the world's leading producers of aluminium and energy. Net sales break down by activity as follows:
- manufacturing of aluminium products (44.6%): primarily extruded aluminium profiles, rolled aluminium products, tubes, sheet metal, construction metals, automotive components, etc.;
- sale and trading of aluminium (36.4%);
- production and refining of aluminium (16.6%): bauxite and alumina, raw aluminium and aluminium foundry products;
- production and distribution of energy (2.4%): electricity (No. 2 producer in Norway) and hydroelectric power.
Net are distributed geographically as follows: Norway (5.9%), Germany (9.5%), Poland (4.2%), France (3.9%), European Union (12.9%), Switzerland (6.9%), the United Kingdom (2.3%), Europe (7.9%), the United States (22.3%), Americas (7.7%), Japan (3.6%), China (2.6%), Asia and the Middle East (10.3%).
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