Nel ASA's $20 Million Collins Aerospace Backlog Stretches Revenue Into 2028 as SB1 Markets Slashes Target
Published on 10/02/2026 at 04:01 | Editorial boerse-global.de
Nel ASA has quietly assembled roughly USD 20 million in firm orders from Collins Aerospace, but the Norwegian hydrogen equipment maker will have to wait years before those contracts show up in its income statement. The company's US subsidiary, Nel Hydrogen US, disclosed a USD 7 million follow-on booking on Wednesday, adding to a USD 12 million order announced the previous day. Both amounts are being recorded in full in the third-quarter 2026 order intake, yet deliveries are spread across 2027 and 2028.
The hardware in question is a set of PEM electrolyser stacks destined for oxygen generation inside submarine life-support systems. The expanded scope covers naval programs run by the United States, the United Kingdom and France — a footprint that cements Nel's place in military equipment supply chains even as it forces the company to stretch the associated revenue over multiple years.
A split-continent production model takes shape
While the defense work moves through the pipeline, Nel is reorganizing how it builds PEM technology. Stack manufacturing stays put at the company's Connecticut facility, which will supply the units for the forthcoming naval contracts. For European sales, the group is leaning on outside partners: roughly three weeks ago it signed a framework agreement with Hydrasun to establish dedicated assembly and integration capacity for the MC series on the continent. That arrangement is meant to bolster regional production of the modular platform, while the core technology component continues to ship from the United States.
The setup leaves Nel with a firm foothold in military programs but a multi-year gap before the money arrives — a tension that has not gone unnoticed by the market.
Should investors sell immediately? Or is it worth buying Nel ASA?
Analysts stay bearish as oversupply clouds the sector
On Tuesday, research house SB1 Markets reiterated its sell rating on Nel ASA and trimmed its price target to NOK 0.30. The analysts pointed to global overcapacity in electrolysers and the Norwegian company's modest market share. Their caution lands during a stretch of broad reticence toward hydrogen equipment suppliers, with many market participants questioning whether existing capacity can be run profitably in a fiercely competitive landscape. Large projects are being awarded late in many regions, and Nel must demonstrate that its technology can drum up sufficient demand even under difficult conditions.
The bear case rests on a simple arithmetic problem: if worldwide manufacturing capacity keeps outpacing real demand for electrolysers, price competition intensifies, and a small market share becomes doubly painful as larger rivals enjoy clear scale advantages in procurement and production. A cumulative order volume of around USD 20 million barely moves the needle on utilization for an industrial manufacturer at group level, and with call-offs stretching into 2028, the annual revenue contribution stays modest. Should price pressure on standard electrolysers worsen, margin erosion in the core business looms — and if additional large industrial orders fail to materialize, the oversupply that analysts flag could weigh on overall earnings power.
The bull case: niche strength in unforgiving conditions
The optimistic reading leans on Nel's technological positioning in demanding specialty markets. The fact that Collins Aerospace keeps returning to Nel's PEM stacks for submarine life-support systems speaks to the reliability of those systems under extreme operating conditions. Defense and specialty applications follow entirely different rules than the highly price-sensitive market for industrial hydrogen production. Contracts in these security-sensitive areas are considered less volatile and typically carry steadier margins. If Nel can establish itself as a dependable partner to US industry in this niche, it would cushion swings in the civilian project business. Further follow-on orders or maintenance contracts beyond 2028 could turn the PEM division into a predictable foundation — the core of a scenario in which niche strength bridges dry spells in large-scale industrial plant business.
Where the stock stands
The shares closed Thursday at EUR 0.1930, which puts them 9.2 percent below their 200-day moving average of EUR 0.2125. At EUR 0.1938, the stock is currently 47 percent below its 52-week high of EUR 0.3655 — a valuation that lays bare the substantial correction the market has already worked through in recent months.
Investors are left weighing secured capacity utilization for years to come against the drawn-out timing of revenue recognition. As long as Nel can deepen its anchor in the specialty segment and delivery plans for 2027 and 2028 proceed on schedule, the strategic base holds. A stable order backlog gives management room to develop manufacturing further. If civilian demand keeps sliding and global oversupply hardens, however, selling pressure could persist and push the price toward the level analysts have named. The next meaningful catalyst is the official reporting of third-quarter 2026 order intake, which will lay out the true scale of new business.
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