Kepler Cheuvreux reinstates Hydro shares with a 'Buy' rating & price target of NOK 88

Kepler Cheuvreux, a European financial services firm specialising in research, execution, and asset management, resumed coverage of Norsk Hydro SA shares, assigning a Buy rating with a price target of NOK 88.00. A "Buy" rating from a stock analyst indicates their belief that the stock is either undervalued or has significant growth potential, making it a promising investment opportunity.

Analyst Martin Granviken highlighted the cyclical nature of the aluminium market, emphasising the impact of global supply-demand dynamics on prices. Recent market reports indicate an upcoming aluminium supply deficit as Chinese production nears its capacity limit. This development is anticipated to drive aluminium prices higher over the next three years.

Granviken noted that alumina prices reached record highs in the last quarter, and both market projections and futures curves suggest aluminium prices will remain above historical averages. This trend positions Norsk Hydro well to benefit from favourable market conditions.

He also emphasised the strategic importance of aluminium in the global energy transition, citing its rising structural demand over the long term. Granviken highlighted Norsk Hydro's strong position in upstream and downstream aluminium production, enabling the company to capitalise on the growing demand for the metal, particularly in green technologies and sustainable applications.

Hydro's comprehensive operations encompassing the entire value chain—from bauxite extraction to the production of rolled and extruded aluminium products and solutions—are well-positioned to adapt to the shifting market dynamics.

Kepler Cheuvreux's analyst reinstated coverage with an optimistic outlook for Norsk Hydro, highlighting its strong potential amid an industry poised for growth. This growth is driven by a combination of cyclical market trends and the broader shift towards sustainable energy solutions.