Pareto Securities has upgraded its recommendation for Norwegian aluminum producer Norsk Hydro to buy (from hold) and raised its target price to 94 Norwegian kroner (from 74).
The analysts note that recent production disruptions have quickly erased much of the previously expected aluminum surplus for 2026, and now see a robust market outlook. Challenges in securing cheap electricity for smelters, strict Chinese production caps, and widening copper-aluminum spreads are all expected to drive demand.
The bank has raised its aluminum price assumption for 2026–2027 to $3,000 per ton and has adjusted its earnings per share forecasts upward by 18 and 12 percent, respectively. With these revisions, the forecasts are now about 13 percent above consensus, which Pareto believes points to continued upside in estimates.
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 (44.4%): primarily extruded aluminium profiles, rolled aluminium products, tubes, sheet metal, construction metals, automotive components, etc.;
- sale and trading of aluminium (35.3%);
- production and refining of aluminium (18.5%): bauxite and alumina, raw aluminium and aluminium foundry products;
- production and distribution of energy (1.8%): electricity (No. 2 producer in Norway) and hydroelectric power.
Net are distributed geographically as follows: Norway (3.9%), Germany (9.9%), France (4%), Poland (4%), Spain (3.9%), Italy (3%), European Union (11.5%), Switzerland (7.7%), the United Kingdom (3.2%), Turkey (1.2%), Europe (0.3%), the United States (20.4%), Brazil (4.8%), Canada (4.1%), the Americas (1.5%), Japan (3.5%), China (2.7%), Asia and Middle East (9.1%) and other (1.3%).
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