Vestas Wind Systems (Hold, TP: DKK460.00) - The new reality
Up until now, Vestas’s profitability has not been hurt by auction-based pricing. This has now changed. We have lowered our 2017–2019e EBIT by 10–19%, implying zero earnings growth over the next three years. Due to no earnings visibility, we have applied a 20% discount to our justified EV/EBIT multiple and consequently have downgraded our recommendation to HOLD. Our new target price is DKK460 (680).Vestas Wind Systems is an industrial machinery and equipment manufacturing company based in Denmark. Co. is engaged in the production of wind turbines. Co.'s main activities comprise development, manufacture, sale, marketing and maintenance of installations that use wind energy to generate electricity. Co. supplies products, from individual turbines to the delivery of turnkey wind power installations globally. Co. supplies guidance services to its customers in connection with the development, financing and ownership of wind turbine projects. Co.'s main customers are utilities and energy companies.
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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