On Friday, Morgan Stanley (NYSE:MS) adjusted its stance on Orsted A/S (CSE:ORSTED:DC) (OTC: DNNGY (OTC:DNNGY)), downgrading the stock from Overweight to Equalweight and lowering the price target to DKK480.00 from DKK500.00.
According to InvestingPro data, Orsted, with a market cap of $21.6 billion, is currently trading near its Fair Value. The firm's analyst pointed to Orsted's performance, noting it has moved in step with the European Utilities index year-to-date for 2024 and has surpassed the Renewables index by 28%.
The analyst credited Orsted's recent success to positive developments, such as favorable outcomes in the UK's AR6 auction for renewable energy and advancements in farmdown strategies, which have alleviated market concerns about the company's capital structure and returns at the forefront of the industry. InvestingPro analysis reveals the company is quickly burning through cash, though its liquid assets exceed short-term obligations with a current ratio of 1.34.
Despite these positive outcomes, the analyst anticipates a reluctance in the market to re-evaluate Orsted's stock based on the secured projects' value or its long-term growth prospects. The expectation is that Orsted's stock will be more influenced by bond yields in the coming year, rather than by the company's fundamentals. InvestingPro subscribers have access to 12 additional investment tips and comprehensive financial analysis for Orsted, including detailed valuation metrics and growth forecasts.
Morgan Stanley's assessment suggests that investment opportunities with greater potential for value recognition may be found in other companies within the renewables sector, particularly those affected by the US Inflation Reduction Act (IRA) and those with underappreciated value creation.
The firm points to companies like EDPR, RWE (LON:0HA0), and Acciona Energia as alternatives where investors might seek exposure to the oversold renewables market. With a P/E ratio of 29.94 and expected net income growth this year, Orsted maintains its position as a prominent player in the Independent (LON:IOG) Power & Renewable Electricity Producers industry.
In other recent news, Orsted, a Danish renewable energy company, has reported significant developments. The company saw a 22% year-over-year increase in EBITDA for the first nine months of 2024, reaching DKK 23.6 billion. Despite facing impairments in its U.S. offshore projects, Orsted commissioned 550 megawatts of renewable capacity, increasing its total portfolio to 18.2 gigawatts. In a strategic move, Orsted divested a 12.45% stake in four UK offshore assets to Brookfield for DKK 15.7 billion.
On the other hand, Goldman Sachs (NYSE:GS) revised its stance on Orsted, downgrading the stock from Buy to Neutral and adjusting the price target to DKK445.00 from the previous DKK520.00. The downgrade was attributed to several factors that could potentially impact the company's financial performance and operations, particularly in the United States. Goldman Sachs pointed out that changes to tax credits, the introduction of tariffs on imported equipment, and the risk of execution delays could lead to further impairments for Orsted.
These are the recent developments surrounding Orsted, including earnings and revenue results, strategic moves, and analyst downgrades.
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