This wind stock tanked after Trump’s win. Analysts now say buy the dip

November 10

Shares of Vestas Wind Systems tanked on the news that Donald Trump had won the 2024 presidential election. Investors dumped shares of the world’s largest wind turbine maker as Trump has vowed to curtail renewable energy subsidies and favors the oil and gas sector. Other European renewable energy firms, such as wind farm operator Orsted , also fell. However, analysts at a number of investment banks have suggested that investors overreacted to fears of a downturn for the sector. VWDRY 1Y line “Donald Trump’s victory and a republican sweep in Congress is the worst political outcome in the USA for Vestas,” said Jacob Pedersen, head of stock analysis at Sydbank, a Danish investment bank. “But this does not necessarily convert into the worst legislation-scenario or the very negative earnings-scenario that the Vestas share reflects right now.” Pedersen said that any change to the Inflation Reduction Act, President Joe Biden’s signature policy that offers billions in subsidies for clean energy companies, would not lower revenues for Vestas as it has sufficient orders in the pipeline in the U.S. over the next two years. “Furthermore, is it likely that fear of changes in legislation can bring forward customers plans and bring new orders forward so Vestas can build an order pipeline through 2026 and into 2027 before we know more about Donald Trump’s intentions for change of the IRA,” Pedersen added in a note to clients on Nov. 5. “We maintain the Buy recommendation on Vestas.” And he’s not alone — the consensus price target of all analysts covering the stock points to an upside of more than 50%. CEO loads up One investor appearing to heed the analysts’ call is the company’s CEO. Vestas disclosed on Nov. 6 that chief executive Henrik Andersen had purchased 10,000 shares amounting to about $150,000 on the Nasdaq Copenhagen exchange. Vestas shares are also traded in the U.S. with the ticker VWDRY . Deutsche Bank’s analysts John Kim and Gael de-Bray agree that the political sentiment in the United States is “not supportive” of Vestas’ share price, but suggest that the market’s overreaction may have priced in too much of the worst-case scenario. This could offer investors an opportunity, according to the analysts, as shares could rally if the situation is better than forecast. “We find limited downside from current levels but the shares may not perform short-term due to uncertainty,” they added. In addition to the political headwinds, Vestas Wind Systems has also had to contend with the rising cost of materials and labor over the past few quarters. That’s led to declining margin profits, adding pressure on the stock, which has fallen by more than 50% this year. However, analysts say that costs have stabilized, and the company’s margins are turning around. Adjusting for this, Deutsche Bank lowered its price target on the stock to 150 Danish kroner ($21.56), which still implies a 40% upside from current levels.

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