Vestas Advances as BofAML Sees 50% Upside: Copenhagen Mover

Vestas Wind Systems A/S rose the most among Copenhagen’s benchmark stocks today after Bank of America Merrill Lynch said the Danish turbine maker’s share price could gain 50 percent in a year as profits return.

Vestas rose as much as 5.2 percent, making the stock today’s biggest winner in the Nasdaq OMX Copenhagen 20 index. The shares rose 4.5 percent to 103.90 kroner at 10:00 a.m. local time with trading volume at 47 percent of the three-month daily average.

Vestas shares have more than tripled in value this year as an inflow of new orders drove investor confidence that the company will start making money again. BofA Merrill Lynch today started coverage of the share with a buy recommendation saying earnings will be helped by cost cuts, stronger management, higher prices and more global demand for its turbines.

“We see Vestas as a restructuring story in an industry witnessing less overcapacity, better pricing discipline, stabilizing orders and improving onshore wind economics,” BofA Merrill Lynch analysts, including Pinaki Das, said in a note to clients.

The bank set a price estimate on the share of 150 kroner, indicating a premium to yesterday’s closing price of about 50 percent.

Vestas last week said Ericsson AB’s Anders Runevad will replace Ditlev Engel as chief executive officer on Sept. 1. The company switched chairman in 2012 and got a new chief financial officer earlier this year.

“Vestas’s leadership has completely changed providing an opportunity for rebuilding credibility with investors,” BofA Merrill Lynch said. “We anticipate new management to push for further restructuring (more cost reductions) as well as increasing the focus on profitability and on growing the high margin service activities.”

Separately, Stoxx Ltd. said late yesterday that Vestas will enter the Stoxx Europe 600 Index as of Sept. 23.

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