Morgan Stanley cuts Public Power Corp’s price target to EUR15 versus EUR16. The broker keeps the stock at underweight.
“We trim our price target and substantially lower our earnings per share forecasts to reflect increased lignite and gas costs, pool price development, and the larger than expected CO2 deficit from 2008. These elements more than offset the benefit coming from cost cutting.
Morgan Stanley believes that any cost cutting potential is limited and the restructuring plan to be announced by the new management this summer “could disappoint”.
It also said that Greece’s main electricity producer reliance on lignite will be costly.
“The key problem we see for PPC is the structural and substantial deterioration in the productivity of lignite mining. PPC’s lignite costs have doubled in five years and, with emissions costs included, PPC’s lignite production cash costs are higher than for a brand new CCGT.
At midday, the stock was down 2.2% at EUR21.62 amid mild gains of the general stock market index.