HSBC ups Verbund to 'buy' seeing lasting gains from power price spike

VERBUND AG

08/07/2022 10:58

** HSBC upgrades Verbund  VERB.VI  to "buy" from "hold" and
raises its price target by a fifth to EUR 115, saying the
Austrian hydropower producer could reap lasting benefits from
the rising power prices
    ** The broker says the company is a "prime European utility
beneficiary" of higher power prices as a stable-cost hydro
producer with shorter-term hedging than its peers
    ** Verbund's large pumped storage capacity allows it to sell
hydro at peak prices, HSBC adds
    ** It sees few changes to the status quo despite price hikes
and the few options available to the Austrian government to
offset them
    ** The likeliest scenario is a further one-off special
dividend, that would help the government curb the impact of
higher prices, HSBC says
    ** It flags long-term concerns about a change in Austria and
neighbouring countries to the marginal pricing market model to
cut gas as the main electricity price-setter
    ** Out of 14 analysts that cover Verbund, four rate the
stock "strong buy" or "buy", ​five "hold" and five​ "strong
sell" or "sell"

 (Reporting by Tristan Chabba)
 ((Tristan.chabba@thomsonreuters.com))