The world’s largest wind-turbine maker may suffer less than first feared with Donald Trump in the White House, according to Swedish bank SEB.
Vestas Wind Systems, which last year endured its worst share setback since 2012, rose yesterday after reporting a flurry of new contracts through December. SEB raised its estimate for new orders for the year by 13%, and is advising stock investors to buy the company, which is based in western Denmark.
With more than 40% of Vestas’s revenue coming from the Americas in 2015, the company’s fate depends to a large extent on renewable energy policies in the region.
Investors panicked after the US election, driving the shares down as much as 14% as it emerged that Trump — a self-declared climate-change sceptic — had won.
The stock plunged again in December, when the president-elect put forward Oklahoma Attorney General Scott Pruitt — a staunch opponent of the Obama administration’s climate agenda — as his choice to lead the Environmental Protection Agency.
“Sentiment towards Vestas’s shares has been weak since November 2016 due to concerns about a mid-cycle US slowdown and fears that the incoming US Trump administration will adopt a hostile approach to renewables,” Fasial Kalim Ahmad, an analyst at SEB, said in a note to clients yesterday.
But Ahmad said there’s a chance the US market could surprise “meaningfully on the upside,” this year. And while investors have been wary of how a President Trump will shape US energy policy, SEB says the inflow of orders confirms the bank’s view “that the reality on the ground is better than feared by the stock market.”
Though Trump has made clear he doesn’t like wind power, existing legislation supporting the industry is set to run for several years. The US congress last year passed a production tax credit, or PTC, that will give tax breaks to wind producers until 2020.
Shares in Vestas rose as much as 3.2% yesterday and traded 3.1% higher at 473.40 kroner as of 1:40pm in Copenhagen. The stock declined 5.1% last year, the worst performance since 2012, when the company lost 49%.
Vestas received wind turbine orders for a record 2.8 gigawatts in December, according to calculations by Jyske Bank.
“We see good chances that Vestas will have to upgrade its expectations for free cash flow in 2016,” Janne Vincent Kjaer, vice-president of equities at Jyske, said in a note, repeating a strong buy recommendation on the stock.