Financial Trading Blog
Stock of the day 16/02/2016 – Norsk Hydro ASA
Following the 4 year lows (the stock falling to 25.20 NOK per share) struck in the aftermath of Black Monday Norsk Hydro updated the markets with its third quarter figures on the 20th October, and investors weren’t particularly impressed. Despite beating estimates, with underlying operating profit at 628 million NOK, far higher than the forecast 560 million NOK, its outlook for primary aluminium demand, falling to 2% (for the world excluding China) from the previously stated 2-3%, appeared to weight on investors’ minds, helping send the stock over 4.5% in immediate reaction to the statement.
(Source: IT-Finance.com 16/02/2016)
The third quarter report helped cap Norsk Hydro between a 31 to 33 NOK per share band for the rest of 2015, with the stock entering the New Year at 31.30 following comments from CEO Svein Richard Brandtzaeg claiming that the market situation remains ‘very sensitive’. The intensification of fears over Chinese growth, and the subsequent impact this had on commodity prices, caused the company to match its post-Black Monday nadir by the end of January, Norsk Hydro at one point trading at 25.71 NOK. Norsk Hydro sits at a current trading price of 29.49 NOK (IT-Finance.com, 16/02/2016).
Given aluminium’s struggles at the moment (largely thanks to the surplus caused by the Chinese slowdown) Norsk Hydro faces an uphill battle when it reveals its fourth quarter figures on Wednesday. It will be especially interesting to see if the company reveals any cuts in output to deal with the plunging commodity prices. Regardless, this fourth quarter report is likely to be worlds away from the company’s recording breaking Q4 figures posted this time last year, when underlying profit effectively increased six-fold from 471 million NOK to 2.89 billion NOK in the space of 12 months.
Norsk Hydro ASA has a consensus rating of ‘Hold’, comprised of 4 ‘Buy’ ratings, 2 ‘Sell’ ratings and 2 ‘Hold’ ratings.
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