Verbund Declines as Morgan Stanley Reduces Rating: Vienna Mover
Verbund dropped as much as 1.8 percent in Vienna trading, the biggest intraday decline since June 28. It was down 1.2 percent at 18.35 euros as of 10:44 a.m. local time, extending this year’s slump to 11 percent.
Morgan Stanley cut the stock to equalweight from overweight and reduced its share-price estimate to 23 euros from 24 euros, saying Verbund’s A-/A2 credit rating is at risk in the “current commodity-price environment,” according to a note to clients.
European power utilities have seen profit margins tighten as the region’s economic stagnation damps demand. German power for next-year delivery has fallen 10 percent from its 2012 high on Feb. 27, and sank to a record-low on June 18. Prices may recover as aging power stations are closed, Morgan Stanley said.
“We see upside risk to power prices over the next 12 to 18 months as older, uneconomical thermal plant comes off the system in Germany, and we feel this will support the shares in the medium term,” Arsalan Obaidullah, an analyst at the brokerage in London, said in the note.
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