Tuesday, RBC Capital initiated coverage on Vestas Wind Systems A/S (VWS:DC) (OTC: VWDRY) with an Outperform rating and a price target of DKK243.00. The firm's analysis suggests a promising medium-term outlook for the company, despite challenges faced over the past two years.
RBC Capital projects a significant 12.0% organic sales compound annual growth rate (CAGR) for Vestas over the next five years, outpacing the expected industry average of 4.7%. This growth is anticipated to be supported by robust demand for renewable energy and favorable pricing conditions.
The firm also forecasts a pathway for Vestas to achieve adjusted EBIT margins of 10% by 2026. This improvement is expected to be driven largely by the company's existing backlog and a reduction in provisions that have previously impacted financial performance.
The Outperform rating and price target are based on a discounted cash flow (DCF) analysis. RBC Capital's stance indicates a confidence in Vestas' potential to outperform in the market, backed by a strong operational setup and market conditions conducive to growth in the renewable energy sector.
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