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Vestas Falls as Much as 6.2% as Chanos Says ‘Best Avoided’

Vestas Wind Systems A/S, the largest wind-turbine manufacturer, fell the most in three weeks in Copenhagen after investor Jim Chanos recommended betting against the stock.

Vestas declined as much as 6.2 percent to its lowest in almost five years and pared its loss to 4.3 percent at 2:37 p.m. local time.

“The market is very sensitive to bad news at the moment,” said Eduardo Tabbush, an analyst at Bloomberg New Energy Finance in London. “The sentiment about wind and about Vestas especially is very bad.”

Chanos, the short seller known for predicting Enron Corp.’s collapse, yesterday said the Randers, Denmark-based company will be “under financial strain and best avoided,” while Nordea Bank AB forecast that the U.S. wind market will remain depressed for the next three years.

Michael Holm, a spokesman for Vestas said the company never comments on movements in its shares. “People make money out of shorting stocks,” he said.

U.S. wind-turbine installations will likely average between 6 gigawatts and 8 gigawatts a year as cheap natural gas prices offer power generators an alternative way to reduce carbon dioxide emissions, Nordea said in a note yesterday.

“The issue with the U.S. isn’t going to help them,” said Stephane Aderca, an analyst at Liberum Capital Ltd. in London. “Vestas is invested heavily in U.S. wind production facilities and we are still well below the 10 gigawatt record.”

Analysts are divided over the outlook for the company, with 15 recommending buying the stock and 13 saying it should be sold out of 38 views compiled by Bloomberg.

Financial Forecasts

Vestas is “highly likely” to meet its 2011 forecasts for revenue and margins, analysts at Matrix Investment Management Ltd. said in a note on May 20. The company has already secured enough orders for delivery and commissioning in 2011 to meet 95 percent of its target of 6,000 megawatts of shipments that underpin its financial forecasts, analysts Tom Plinston and Michael McNamara said today in a note to investors.

“This suggests that Vestas is highly likely to achieve its 2011 revenue and margin guidance of 7 billion euros ($10 billion) and 7 percent, respectively,” the analysts said. “This sets a floor under Vestas’s share price.”

Shares in Vestas have lost about 18 percent in the last month, compared with the 7.7 percent decline in the 64-member Bloomberg Global Leaders Solar Index.

“There are risks to take into account, but this year is clearly going to be better than last year and this is not being reflected in the price,” Tabbush said.

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