Shares in Danish turbine manufacturer Vestas have nosedived by around 20% following last week’s disappointing results, where it was revealed that the company generated second-quarter revenues of €1,007 million (£825 million), a drop of 17% relative to the second quarter of 2009. Vestas said the drop was expected due to the credit crisis, and gave positive news with order intakes reaching a record level of 3031 MW in the quaurter, which is not only the highest level ever recorded but equals the entire order intake for 2009.
My view is that the sell-off has been over-done, and given the company’s prospects this is a good time to snap up some shares. The Vestas board seem to agree, having given their backing to the company following the price fall by splashing out DKK3.95million (£435,741) on shares.
Andreas Schreyer at The Green Investor in the US is also bullish on this stock: “Vestas has weathered the storm better than many wind companies and comes out of it in a much stronger position, with its capacity intact and well positioned geographically”, he comments. “Within a couple of quarters, the company will most likely be announcing record revenue and profitability, and by all of our measurements, the company is now extremely undervalued. A steal really, and with very little downside risk.”
Disclosure: C F Hanna Ltd has holdings in Vestas.
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