Analysts expect this under-the-radar global carbon capture stock to soar by up to 65%

Published Mon, Jan 16 20237:15 PM EST

Shares of Norway-based Aker Carbon Capture could rise by 65%, according to analysts, as demand increases for emissions reduction technology. Aker Carbon Capture builds carbon capture and storage (CCS) plants in an effort to lower emissions from industrial cement and steelmaking plants. The company's latest innovation, revealed last week, would cut the energy needed to capture carbon and improve the company's profitability in the future, according to analysts at Berenberg. A typical CCS process consumes a lot of energy, but Aker's new technology is expected to recycle internal waste heat and cut the total energy needed by 10%, according to the German investment bank. "Clearly, an efficient solvent combined with optimal heat recovery can have a positive impact on system economics and potentially accelerate scale-up of the industry," the Berenberg analysts said in a note to clients on Jan. 13. While Berenberg expects the stock to rise by 49% to 20 Norwegian Krone ($2) from its current level of around 13.61 Norwegian Krone, the median price target of eight analysts compiled by FactSet puts its potential rally at 65% over the next 12 months. AKCCF 1Y line The Oslo-listed firm is currently building its first carbon capture plant on a cement facility that is expected to lower emissions by more than 90%. The company says the captured carbon dioxide will be transported by ship and stored on the Norwegian continental shelf. Supporters of CCS believe the technology will play a key part in achieving climate goals, while critics argue that it is " ineffective, uneconomic and unsafe ," serving to prolong reliance on fossil fuels instead of transitioning to renewable alternatives. Aker Carbon Capture, listed since August 2020, says it has already secured contracts that will remove up to 10 million tons of carbon annually from 2025 — the equivalent of total emissions from 10 large-scale cement plants. Berenberg analysts said Aker's stock could also move following an expected announcement from the U.K. to build carbon capture plants. Although the analysts said a sizeable contract win has been partially priced into the stock. Not everyone is bullish on the stock, however. Analysts at Norwegian investment bank Arctic Securities expect the stock to stay flat over the next 12 months. They say the company will remain about 30% below its 2025 carbon removal capacity target even after potentially winning contracts awarded in the U.K. "We have revised down our 2023-2025 revenues estimates by ~18- 33% as a result of somewhat slower estimated order intake and backlog conversion on new contracts," said Lukas Daul, an analyst at Arctic Securities, in a note to clients on Nov. 20. Aker Carbon Capture's ADRs are also traded on the OTC markets in the U.S.