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On Tuesday, Barclays (LON:BARC) analysts downgraded Orsted A/S (CSE:ORSTED:DC) (OTC:DNNGY) stock from Equalweight to Underweight. The new price target set by the firm is DKK 239.95, a significant reduction from the previous DKK 365.41. The downgrade reflects concerns about ongoing uncertainties in the United States market, which are expected to affect both offshore and onshore wind operations. These uncertainties include the impact of tariffs, the Inflation Reduction Act (IRA), and legislative ambiguities.
Barclays pointed out that Orsted might need to lower its growth expectations or consider asset disposals to strengthen its balance sheet. Otherwise, the company could face the need to raise additional equity. The analysts remarked on the challenges Orsted is facing, stating that "the ill wind continues to blow" for the company.
The reassessment of Orsted’s investment case by Barclays led to a new price target of DKK 240, down from DKK 365. The valuation of Orsted’s operating assets is now placed at DKK 205, with only DKK 35 attributed to pipeline value. Barclays utilizes a relative valuation approach, expressing a preference for European-regulated networks over other asset classes.
In the renewable energy and network sectors, Barclays continues to favor SSE (LON:SSE), with an Overweight rating and a price target of 1870p. This preference is based on SSE’s position and prospects within the industry, contrasting with the more cautious outlook for Orsted.
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