JP Morgan upgrades Public Power Corp or PPC to overweight from underweight citing Greece’s parliamentary elections scheduled for Sept. 16.
“We expect the incumbent government to stay in power, which should be a positive catalyst for management continuation and regulatory negotiations,” the broker says in a research note dated Aug 21.
However, JP Morgan says that the current year will be a worse-than expected year in terms of profitability but “we feel confident that the “perfect storm” of adverse exogenous factors and the lack of influence over the controllable variables will come to a halt and, if no change in government, reverse over the next 18 months.”
The broker raises the price target to EUR30 versus EUR15.90 previously and sees the stock as a buying opportunity.
PPC is slated to release its first half earnings performance by the end of August.
Most brokers see a sharp fall in its net profits which are seen down by 60%. Proton Securities sees PPC’s second quarter net losses standing at EUR3 million compared with gains of EUR7.8 million in the respective period of 2006, despite the lower effective tax rate-28% versus 50%.
“Higher fuel oil and energy purchases costs that both reflect the unfavorable generation mix due to the still low levels of hydroproduction,” were seen as the main reasons for the company’s slacking performance.
At midday, the stock was up 1.3% at EUR21.75 amid a flat stock market.