Deutsche Bank changes Vestas to 'hold', cuts target price
Danish wind turbine manufacturer last week had narrowed its 2024 profit guidance and posted a widening second-quarter loss
Deutsche Bank has changed its recommendation of Danish wind turbine manufacturer Vestas to ‘hold’ from ‘buy’, and cut its target price to DKr175 ($29.90) from DKr200 per share, as better fundamentals in onshore were offset by less favourable figures in service and offshore.
“As we adjust our forecasts, we turn a bit more negative overall until Vestas can deliver a more consistent set of results,” analyst John Kim said in a note to investors.
“We see share performance as partly dependent on the market outlook for growth, consistent throughput for onshore deliveries and managing execution risk.
“Versus our previous view, we are more positive on equipment margin this year and a bit more negative on Service and on full year 2025 margins due to mix with Deutsche Bank’s estimate below consensus.”
On Friday, Vestas shares had closed 0.41% lower at DKr159.45 on the Copenhagen stock exchange stock exchange. The stock fell another 0.72% to DKr158.30 per share at the opening Monday.
On the upside, the OEM posted a soaring order intake of 3.6GW in the second quarter of 2024, driven by onshore projects in Europe and Asia Pacific.
"Vestas continues to remain well-positioned in the energy transition and renewables so we see the investment thesis as intact," Deutsche Bank said.
"That said, we also see an opportunity for Vestas to disappoint vs consensus expectations in FY25," the analyst said, adding that he doesn't "see the company reaching its long-term adjusted earnings before interest and taxes (Ebit) margin target of 10% (Deutsche Bank expects of 7.6%) as the market needs to incorporate greater uncertainty in service and offshore contributions."
(Copyright)