Barclays flags decade-low order levels for Vestas in Q2

Investing.com -- Barclays (LON:BARC) has warned that Vestas Wind Systems (CSE:VWS)’ second-quarter 2025 order intake could fall to the lowest level in a decade, sharply undercutting market expectations. 

In a recent note, Barclays estimated total Q2 orders at approximately 1.6GW, more than 50% below the 3.65GW consensus. 

The figure includes 1GW of announced onshore orders, with an additional 550MW assumed from unannounced deals. 

The brokerage said this level would mark a continuation of subdued momentum for the turbine maker.

The shortfall is not confined to a single geography. According to Barclays, the decline indicates pressures beyond the U.S., where regulatory uncertainty persists. 

Vestas is also facing market share losses in emerging markets and a likely saturation in key European countries. 

No offshore or U.S. orders were announced for the quarter. The absence of offshore contracts was the first since Q1 2024 and reflects the segment’s lumpy nature, which Barclays said is dependent on a limited number of active national markets. 

In the U.S., no new deals followed a single order in Q1, with ongoing uncertainty around Inflation Reduction Act (IRA) guidelines. 

A recent Senate proposal would require projects to be operational by the end of 2027, leaving limited scope for a near-term pickup in activity.

Germany accounted for roughly 40% of all announced orders in the quarter, totaling 0.4GW. 

However, project delivery timelines there are already stretching into 2027, suggesting possible pre-ordering behavior. 

This echoes the backlog extension seen in the U.S. in 2023, raising concerns about the timing of actual deployments.

Barclays projects first-half 2025 orders at 4.7GW, or about 29% of the full-year consensus forecast. 

The brokerage maintains an “underweight” rating on Vestas, citing continued risks to earnings expectations and market positioning. Its price target remains at DKK 60, implying a 36.9% downside from the closing price of DKK 95.02 as of June 30.

Barclays attributes the weak outlook to overstated growth prospects in offshore wind and services, coupled with rising competitive pressures. 

It also flagged signs of demand fragmentation, slow permitting, and extended project timelines, particularly in Vestas’ core and growth markets.

As of the latest forecast, Vestas’ 2025 total revenue is expected to reach €18.6 billion, with adjusted EBITDA of €1.73 billion and net income of €440 million. 

The company’s free cash flow is projected at negative €880 million, and net debt is expected to turn positive at €71 million. 

These metrics reflect a more constrained financial profile compared with 2024, when Vestas posted free cash flow of €1 billion and held net funds of €809 million.

The company’s order weakness, combined with tightening sector dynamics and macro policy headwinds, continues to weigh on sentiment. 

Barclays said that without a significant shift in demand or policy clarity, the near-term outlook remains challenged.