Vestas Shareholders Told to Brace for U.S. Election Price Shocks

(Bloomberg) -- Vestas Wind Systems A/S reports earnings Tuesday morning, but shareholders may need to pay more attention to events in the evening when the results of the U.S. election start coming in.

“If Donald Trump wins, I have no doubt that the Vestas share will fall the next day,” Jacob Pedersen, chief of equity analysis at Sydbank, said in a phone interview. “And if Hillary Clinton wins, the share will rise” as “some of the risk of a Trump win has been priced into the share.”

The world's largest maker of wind turbines is the Danish company with the most riding on the outcome of the vote, according to Pedersen. Bloomberg Intelligence estimates that about 41.3 percent of Vestas's revenue last year came from the Americas.

For more on the U.S. election, click here.

Vestas shares lost more than 8 percent last week, underperforming most indexes, as Trump narrowed the gap to Clinton in opinion polls. According to an Ernst & Young LLP survey published last month, the U.S. may lose its position as the top-ranked renewable-energy market for investors if Trump wins the presidency.

“He hates wind turbines and will do what he can to fight them,” Pedersen said.

With Clinton still the favorite in most polls, analysts expect the stock to recover, with the average price target pointing to gains of about 16 percent over the next year, the biggest return potential since late 2014, according to data compiled by Bloomberg.

Trump, who has blamed wind turbines for killing bald eagles, has as a businessman unsuccessfully tried to stop offshore parks that spoil the view from his golf course in Scotland.

“Clinton is pro-renewable energy while Trump clearly isn't, so the election can have a short-term impact on the share price.” Janne Vincent Kjaer, vice president of equities and a Vestas analyst at Jyske Bank, said by phone. “It's likely that we will see a sentiment-driven share reaction as the result of the election becomes clear.”

Still, both Kjaer and Pedersen said the harm a Trump presidency might inflict on the U.S. renewable energy market will be limited because congress has already passed a law that secures tax breaks for the wind industry until 2020.

For a Bloomberg Intelligence piece on U.S. wind legislation, click here.

“The PTC agreement is in place and has been passed with a broad majority,” Kjaer said. “It's also worth noting that a stronger position in the Senate for the democrats could be positive for renewable energy even if Trump wins.”

--With assistance from Jessica Shankleman To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net. To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net.