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On Monday, Bernstein analysts revised their outlook on Fortum OYJ (HE:FORTUM:FH) (OTC: FOJCY), downgrading the energy company’s stock rating from Outperform to Market Perform. The price target remains set at €16.50, reflecting the analysts’ view that the stock’s significant gains over the past year have capped the potential for further upside.
Fortum’s shares have seen an approximate 35% increase in value within the last twelve months. Bernstein’s analysts believe that this surge has brought the stock’s price close to their target, suggesting a narrowed scope for future growth based on the current trajectory of power prices. The price target is based on power prices aligning with the current forward curves.
The analysts indicated that for a more optimistic view on Fortum’s stock to be justified, there would need to be concrete signs of rising power demand that could drive forward price curves upward. Additionally, Fortum’s ability to secure Power Purchase Agreements (PPAs) at rates higher than the market could also contribute to a more favorable perspective on the stock’s future performance.
The decision to downgrade Fortum to a Market Perform rating was made without any change to the price target, which stands unchanged at €16.50. Bernstein’s stance reflects a wait-and-see approach, looking for tangible evidence of growth in power demand or successful above-market rate PPAs before considering a more bullish position on Fortum’s stock.
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