Vestas Gains as Citi Sees Profit Returning: Copenhagen Mover
Vestas Wind Systems A/S (VWS) rose the most among Copenhagen benchmark stocks today after Citigroup Inc. said the Danish wind turbine maker is showing progress in returning to profit.
Vestas advanced as much as 1.8 percent, making it the biggest winner on the Nasdaq OMX Copenhagen 20 index (KFX), which gained 0.3 percent. The stock rose 1.6 percent to 41.74 kroner at 10:03 a.m. in the Danish capital with trading volume at 13 percent of the three-month daily average.
Vestas, which has struggled to shrug off losses amid industry overcapacity, last month reported revenue that exceeded analyst estimates and said it doesn’t need to sell shares to raise more cash. Citi today increased its price estimate on the stock to 43 kroner from 40 kroner and said the company may be able to match industry peers’ operation profit margin of about 5 percent.
“There are increasing signs of progress in our view,” Mark Fielding, an analyst with Citi, said in a note. “Longer term, with the correct management action, we don’t see structural reasons why Vestas could not achieve at least a 5 percent margin.”
The Aarhus, Denmark-based turbine maker said Feb. 6 that fourth-quarter sales rose 25 percent from a year earlier to 2.5 billion euros ($3.27 billion). That exceeded the average estimate of 2.3 billion euros in a survey of 14 analysts.
“We believe some caution will likely remain around the company as the market looks for further evidence of delivery against a challenging trading backdrop,” Fielding said, repeating a neutral recommendation on the share.
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