Brokers downgrade view on Vestas after 2011 outlook cut

Jan 4, 2012 - Six brokers downgraded their view on Danish Vestas Wind Systems A/S (CPH:VWS), after the wind-turbine maker lowered its guidance for 2011 and now expects an operating result around zero, to reflect deferred revenue and higher costs.

HSBC cut its recommendation to "underweight" from "neutral" and its target to DKK 50 from DKK 90, as it foresees a continued press on margins in 2012, caused by a rise in costs. Vestas's guidance downgrade smashed investor confidence, the bank added.

Handelsbanken's recommendation was lowered to "reduce" from "accumulate", while the price target is now DKK 65 against earlier DKK 88.

Bryan Garnier changed its advice on the stock to "neutral" from "buy" and axed the share target to DKK 87 from DKK 144.

Nordea now has a share price target of DKK 65, compared with former DKK 85. The "hold" rating was retained.

Credit Suisse and Goldman Sachs reduced their targets to DKK 60 from DKK 95 and to DKK 68 and DKK 73, respectively.

The wind turbine maker released yesterday evening preliminary figures for the full 2011, according to which operating profit is seen at zero, against previously expected EUR 255 million (USD 332.4m). The operating margin is now projected at 0% versus around 4%, estimated earlier.

Full-year revenue, projected at EUR 6.4 billion, came in at some EUR 6 billion, while expenses were EUR 125 million higher than estimated.

On the other hand, order intake landed at 7.4 GW, or EUR 7.3 billion, on a par with the 7-8-GW expectations.

By 1024 CET on Wednesday, stock in Vestas had plunged 18.68% to DKK 56.50 on the exchange in Copenhagen.

(DKK 1.0 = USD 0.175/EUR 0.134)

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