Bank of America upgraded wind energy giant Ørsted from “neutral” to “buy,” citing an improving risk-reward profile for the battered stock. Shares in the Denmark-headquartered energy company, which also trades in the U.S., have fallen 65% from their 2023 highs as they faced a series of negative headlines about project delays, cost overruns and writedowns in the key U.S. market. It fell by more than %. . However, Bank of America analysts expect Orsted's financial situation to improve in 2024 and raised their price target from $15.06 to $22.80 per share, which is nearly 20% upside from current levels. Become. The upgrade and price target increase come after the stock has already recovered more than 50% from its November lows. DNNGY 1Y Line “We believe the risk-reward distortions have become more apparent,” BofA analysts led by Peter Bisztiga said in a note to clients on Jan. 12, adding that Ørsted is likely to sell assets, capitalize on equipment, etc. He emphasized the possibility of repairing the balance sheet through investment cuts and investment cuts. Possible 25% dividend cut. Analysts said the move would allow Ørsted to achieve its investment-grade BBB+ target credit rating without diluting its equity and without raising capital, which would likely put further pressure on the stock price. Says. Furthermore, analysts at the Wall Street bank believe execution risk is “low” given Ørsted's recent green light for the mega £8bn Hornsea 3 project in the UK. The bank said its remaining U.S. exposure primarily consists of the Sunrise Wind project off Long Island, which still requires state contract approval. Even if Sunrise Wind fails, analysts believe the downside in Ørsted stock is manageable. “Given the recent improvement in the offshore wind industry backdrop and assuming Orsted stabilizes its balance sheet, we believe investors should be willing to pay some price for another moderate growth pipeline,” the analyst said. “There is,” he added.
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