Jefferies cautious on hydrogen as challenges mount

Nel ASA

26/02/2024 11:29

** Jefferies says the hydrogen industry faces macroeconomic
challenges coupled with a lack of clarity on regulation and
future demand, which has led to continued delays in final
investment decisions
    ** Green hydrogen's role in the energy transition remains
somewhat uncertain, the broker says, as fewer than 4% of
announced projects have reached firm investment decisions or are
currently under construction
    ** The high cost of hydrogen produced through electrolysis
is a major obstacle in the widespread adoption of green
hydrogen, it adds
    ** The brokerage also flags absence of appropriate
infrastructure, noting infrastructure development has come into
policy debate only recently
    ** Jefferies has a cautious stance on the sector, and
favours players with strong balance sheets and potential
short-term momentum
    ** The broker cuts Nel  NEL.OL  to "hold" from "buy" on
diminished order visibility and risk of another capital increase
in 2025
    ** It upgrades ITM Power  ITM.L  to "buy" from "hold",
seeing the company as better positioned for future profitable
growth thanks to improved short-term visibility
    ** It keeps "hold" on Ceres  CWR.L  and PowerCell
 PCELL.ST , cautious on the growth outlook of fuel cells due to
increased competition from electrification

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))