## Thyssenkrupp Nucera Upgraded to 'Buy' by Deutsche Bank Amid Expected Activity Trough
Thyssenkrupp Nucera (ETR:NCH2) received a significant upgrade from analysts at Deutsche Bank, who elevated the stock from a "Hold" to a "Buy" rating. This optimistic shift occurred despite the accompanying reduction in the price target, which was adjusted downward from €12 to €11. The rationale behind the upgrade, as articulated by analyst Michael Kuhn, hinges on the assessment that the shares are currently valued near a cyclical low point in operational activity.
Kuhn highlighted the company’s consistent operational delivery throughout the previous fiscal period (FY24-25). Group sales reached €845 million, experiencing a marginal 2% decline year-over-year. Crucially, the firm successfully navigated back to profitability, posting a positive EBIT of €2 million, representing a substantial turnaround from the €14 million loss recorded in the prior year. This financial reversal was largely powered by a more favorable blend of green hydrogen projects and the robust performance of the chlor-alkali segment.
However, market attention is now primarily fixed on the management's guidance for the upcoming FY25-26 period, which projects a significant contraction in operational workload. Management anticipates that group sales will drop sharply into the range of €500 million to €600 million. Correspondingly, earnings before interest and taxes (EBIT) are forecasted to land between a €30 million loss and the break-even point.
This notably cautious outlook is directly linked to a scarcity of new major green hydrogen contract awards. Furthermore, even potential new orders are unlikely to contribute meaningfully to revenues before the FY26-27 fiscal year. This lag is attributed to expected delays in project commencement, meaning revenues will not materialize in the immediate term.
Kuhn suggested that these factors position the green hydrogen division squarely at a near-term low point in business activity. To navigate this expected downturn, the company is expected to implement measures aimed at adjusting cost absorption. Simultaneously, Nucera is anticipated to strategically maintain crucial customer relationships through sustained investment in front-end engineering design and developmental work.
