Scatec (Sell, TP: NOK45.00) - Lagging behind the bond market
Scatec’s share price is yet to reflect recent developments in the debt market, with its bond yield having risen from 6.8% a month ago to 9.2%. To reflect the higher opportunity cost associated with investing in the company’s shares rather than its bond, we have raised our cost of equity from 10.5% to 13.2%, i.e. a 4%-point spread to the bond yield. As a result, we have lowered our target price to NOK45 (70). We believe a higher cost of equity could result in the company revising its growth plans and reiterate our SELL.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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