MS cuts Fortum on uncertain timing for power demand growth

Fortum Oyj

28/02/2025 10:50

** Morgan Stanley cuts Finnish energy group Fortum FORTUM.HE to "equal-weight" from "overweight," citing uncertain timing for power demand growth in Nordics

** MS says that despite limited capacity growth Fortum could benefit from growth in Nordic power prices, but this depends on increased power demand for which the timeline remains uncertain

** It says that plans to build new data centers and industrial facilities in the Nordics have not translated into power purchase agreements (PPA) contracts yet, while the Finnish transmission operator communicated restrictions to connecting new electricity consumption facilities

** "Although this builds confidence that power demand is materialising in the country, it also outlines limits to the speed of pick up, and increases the risk of the timeline slipping to the right," says MS

** The broker says after 12% rally and 8% sector outperformance year-to-date, Fortum's valuation is fairly reflecting the group's fundamentals

** Out of 20 analysts covering the stock, two rate it "strong buy" or "buy", 10 rate it "hold" and eight rate it "sell" or "strong sell," according to LSEG data

 (Reporting by Vera Dvorakova)

 ((vera.dvorakova@thomsonreuters.com))