Hidroelectrica’s shares down 6.9% w/w after negative reports from Morgan Stanley and Citibank

Citing the lower price of electricity, the analysts of the US investment bank Morgan Stanley revised downwards the target price for the shares of the Romanian green energy producer Hidroelectrica (BVB: H2O) from RON 110 to RON 95, which was about 26.5% less compared to the over RON 129 closing price on January 19, Ziarul Financiar reported.

H2O’s price lost another 3.4% on January 22 after the Morgan Stanley analyst report was published.

This downward revision comes after another negative assessment published last week. In a note to investors on January 16, Citigroup issued a target price of RON 109 for Hidroelectrica’s shares – 17.9% below the trading price at that time, and gave a “sell” recommendation, according to Profit.ro.

Morgan Stanley explains its downward revision by an environment of lower electricity prices.

“The recent correction of the price of electricity to EUR 85 per megawatt, from EUR 120 in the last three months, is not reflected in the increase in the price of H2O shares in the same period,” Morgan Stanley’s analysts argued, tagging Hidroelectrica’s shares as “underweight”.

Following the publication of the revised evaluation report, Hidroelectrica’s shares dropped by 3.4% to RON 125 – the closing price of January 22. H2O shares registered a decline of 6.9% over the past week.

Hidroelectrica has a market capitalization of RON 56.2 billion (over EUR 11 billion) and is 80% controlled by the Romanian state.

(Photo source: Bucharest Stock Exchange)