In a report released today, Harrison Williams from Morgan Stanley downgraded Fortum Corporation (0HAH – Research Report) to a Hold, with a price target of €15.60.
Harrison Williams has given his Hold rating due to a combination of factors related to Fortum Corporation’s current market position and future prospects. The company’s valuation appears to be in line with its fundamental strengths, as recent stock performance reflects a long-term power price that slightly exceeds the projected forward curve for the coming years. Despite an attractive dividend yield compared to some peers, Fortum’s growth potential is limited by its current capacity, and any further stock price increase would likely depend on a rise in Nordic power prices.
Uncertainty surrounding the timing of power demand growth in the Nordic region also contributes to the Hold rating. While there are plans for new industrial and data center facilities, these have not yet translated into tangible demand increases or power purchase agreements. Additionally, recent updates from Fingrid highlight potential constraints on new electricity consumption facilities, which could delay the anticipated demand growth. As such, more concrete developments are needed before a more favorable rating can be justified.
In another report released on February 25, Citi also maintained a Hold rating on the stock with a €14.30 price target.