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Investing.com - Barclays has downgraded Norsk Hydro SA (OL:NHY) stock to Equalweight from Overweight, while lowering its price target to NOK70.00 from NOK73.00 ahead of the company’s third-quarter results. The metals and mining giant, with a market capitalization of $13.4 billion, has demonstrated strong financial health, earning a "GREAT" rating on InvestingPro’s comprehensive assessment system and achieving a perfect Piotroski Score of 9.
The investment bank forecasts Norsk Hydro will report underlying EBITDA of NOK6.59 billion and earnings per share of NOK1.20 when it releases results on October 23, compared to consensus estimates of NOK6.44 billion and NOK1.29 per share respectively. The company has maintained solid profitability metrics, with a gross profit margin of 37.8% and trades at an EV/EBITDA multiple of 2.3x, suggesting potential undervaluation according to InvestingPro’s Fair Value analysis.
Barclays expects Norsk Hydro’s fourth-quarter outlook to show early signs of demand recovery, particularly given European PMIs have moved into expansionary territory for the first time in over three years, with some improvement in spot ingot premiums while billet premiums remain weak.
For the Extrusions segment, Barclays estimates 2025 EBITDA at NOK4.1 billion, within the company’s guidance range of NOK3.5-4.5 billion, with the lower end assuming no volume growth in Q2-Q4 2025 and reduced recycling margins.
While Norsk Hydro has volume levers to capitalize on recovering demand across its recycling, extrusions, and primary metal businesses, Barclays believes this potential upside is more likely to materialize in 2026 rather than 2025, contributing to the rating downgrade.
In other recent news, Norsk Hydro has experienced a change in its stock rating by Kepler Cheuvreux. The research firm downgraded Norsk Hydro from a Buy to a Hold. This adjustment comes amid valuation concerns, although the firm raised its price target from NOK64.00 to NOK68.00. Kepler Cheuvreux noted that upstream prices have stabilized after a volatile first half of the year. Additionally, there are signs of recovery in Norsk Hydro’s downstream operations. These developments are significant for investors considering the company’s future performance. The downgrade reflects a more cautious approach by the research firm despite the improved price target.
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