Citi raises Fortum stock price target to EUR14.30, keeps neutral stance

On Tuesday, Citi updated its outlook on Fortum OYJ (HE:FORTUM:FH) (OTC: FOJCY), increasing the price target slightly to EUR14.30, up from the previous EUR14.20. The firm maintains a Neutral rating on the energy company’s shares, which currently trades near its 52-week high with a P/E ratio of 11.6x and maintains a solid 3.7% dividend yield. According to InvestingPro analysis, the stock appears fairly valued at current levels.

Citi’s analysts justify their decision by balancing their expectations of declining results for Fortum over the next three years with the possibility of rising long-term power prices. They cite current forward power prices as the basis for the anticipated decline, while potential growth in power demand could lead to higher prices in the long term. InvestingPro data reveals the company has maintained dividend payments for 27 consecutive years, demonstrating resilience through market cycles. Subscribers can access 8 additional key insights about Fortum’s financial outlook.

Despite the slight increase in the price target, Citi does not foresee 2025 as a turning point for local power prices, leading them to sustain their Neutral position on Fortum’s stock. The firm’s analysts believe that while there is potential for change in the power market, the near future may not bring significant shifts in pricing dynamics. The company maintains a strong financial position with an "GREAT" Financial Health score from InvestingPro, supported by liquid assets exceeding short-term obligations.

Fortum OYJ, a Finnish energy company, operates in various segments of the power and heat sector. The company’s financial performance is closely tied to the fluctuations in power prices, which can be influenced by a range of factors including market demand, regulatory changes, and broader economic conditions.

Investors in Fortum will be watching the power market closely, taking note of Citi’s updated price target as they assess the company’s stock performance in the context of the energy market’s evolving landscape.

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