Investing.com -- J.P. Morgan placed aluminium producer Norsk Hydro on "Negative Catalyst Watch" ahead of its Nov. 25 capital markets day, saying 2027 EBITDA could be NOK28.28 billion, -15% versus Bloomberg consensus, if the company cannot secure a long-term gas contract for its Alunorte refinery in Brazil and keeps buying spot liquefied natural gas.
Catalyst Watch is the broker's short-term indicator of caution on a stock ahead of a specific event, and it can differ from its Neutral rating.
The broker cut its December 2027 price target to NOK78 from NOK91, implying about 13% upside from Tuesday's close of NOK68.70.
Norsk Hydro said on Aug. 11 it began buying spot LNG cargoes for Alunorte after a disruption to gas supply from CELBA, part of New Fortress Energy.
The company guided that buying gas at market prices will cut fourth-quarter EBITDA by $90 million to $110 million, slightly more than the third quarter's $75 million to $100 million because it covers a full quarter.
Management based that guidance on spot LNG at about $26 per million British thermal units in early October. Spot LNG has since risen about 20% to about $33, which J.P. Morgan estimates could add about 6% downside risk to 2027 consensus EBITDA.
It estimates every $5 change in the price Alunorte receives per million British thermal units moves EBITDA by NOK1.4 billion, about 4% of 2027 consensus EBITDA.
The broker cut its 2027 EBITDA forecast by 9%, now -10% versus consensus, after third-quarter results and fourth-quarter guidance. At the Nov. 25 event, management will set out 2027 guidance and typically issue indicative group EBITDA scenarios.
J.P. Morgan said gas prices at Alunorte are a key downside risk, alongside North American Extrusions, where management cut its 2026 demand forecast, and heavier maintenance in Energy in 2027.
It expects the 2030 Extrusions EBITDA target, cut at the 2025 event to NOK8-10 billion from NOK10-12 billion, could be lowered again because demand has not materially rebounded, although nine-month 2026 Extrusions EBITDA of NOK3.9 billion beat NOK3.5 billion a year earlier.
Net debt is forecast at NOK17 billion at end-2026, well below management's NOK25 billion through-cycle target, but any dividend surprise could wait until fourth-quarter results in mid-February 2027.
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