Berenberg cuts Verbund to 'hold', flags higher risk of govt intervention

VERBUND AG

19/08/2022 07:59

** Berenberg downgrades the Austrian hydropower producer
Verbund  VERB.VI  to "hold" from "buy", seeing an increased risk
of government intervention if power and gas prices remain high
or rise further
    ** The broker says the risk of government intervention in
energy markets across Europe remains high due to the energy
crisis
    ** "Even with a forecast peak in achieved power prices
in 2023E, we think that EBITDA will remain high with
power prices remaining above pre-Ukraine war and EU
energy-crisis levels due to higher carbon prices" - Berenberg
    ** It says hydro stocks in Austria are below par on hydro
availability, which limits generation output and could require
expensive power buybacks in more severe circumstances
    ** It adds the group may not yet be in a position to deliver
capacity above its current 20-25% of total electricity
generation (3.5GW) target
    ** The broker raises PT by 17% to EUR 100 vs EUR 107 per
share at Thursday's close, up 8.3% YTD
    ** Verbund shares fall 2.7% in early Frankfurt trade

($1 = 0.9916 euros)

 (Reporting by Ozan Ergenay)
 ((ozan.ergenay@thomsonreuters.com))