Vestas Wind Systems A/S fell the most in more than three weeks in Copenhagen trading on concern over the wind turbines maker’s ability to generate cash.
Vestas fell as much as 8.2 percent, the most since July 9, making it today’s biggest loser in the OMX Copenhagen 20 Index. The stock retreated 2.09 kroner, or 7.2 percent, to 26.87 kroner at 10:23 a.m. in the Danish capital.
Vestas, based in Aarhus, Denmark, yesterday said its banks have allowed it to draw on credit lines as cash flow deteriorated. Today, the average price estimate of analysts tracking the stock fell to the lowest in eight years after banks including Nordea Markets cut targets, according to data compiled by Bloomberg.
“Vestas hasn’t come under administration by banks just yet, but they’re only a few steps away,” Jacob Pedersen, an analyst at Sydbank A/S with a neutral recommendation on the stock, said by phone. “Banks are keeping a very close eye on them as they’re in breach of covenants.”
The stock rose 12 percent after yesterday’s announcement because investors bet a share capital increase is now less likely, said Pedersen, who’s based in Aabenraa, Denmark. Today, investors are punishing the stock because the underlying news was “a bombshell” and not in line with the positive tone of the company’s previous reports, the analyst said.
Nordea today cut its price estimate by 13 percent to 35 kroner, according to data compiled by Bloomberg. The average price estimate of 18 analysts tracking the share is now 40.40 kroner, the lowest since June 2004, according to the data.
Vestas’ free cash flow declined by 43 million euros ($53 million) over the second quarter to minus 338 million euros, according to yesterday’s statement.