Vestas: The Wind Is at Our Backs

• 

  Christian Ingerl
  Redaktor

The wind has been blowing for the Danish wind turbine manufacturer Vestas. And it’s blown hard. With surprisingly strong second-quarter results, the company significantly exceeded analysts’ expectations and, at the same time, raised its full-year forecast. The stock market reacted with corresponding euphoria, and the stock jumped by more than one-tenth. This has also suddenly brightened the technical picture: After the stock had been stuck between the 100-day and 200-day moving averages for weeks, a sharp price jump finally broke it free and sent it soaring.

Margins were the primary driver behind the surge. Vestas increased revenue in the second quarter by 26.1% to EUR 4.72 billion, coming in about 2% above consensus estimates. The earnings, however, were even more impressive: Adjusted EBIT reached EUR 446 million, while analysts had expected an average of just EUR 205 million. The corresponding margin of 9.4% was thus more than twice as high as expected.

Power Solutions Makes a Splash

The core Power Solutions business was primarily responsible for this positive surprise. Its revenue surged by 36.8%, while the operating margin made a remarkable jump from -0.4% in the same quarter of the previous year to 10.4%. In addition to higher volumes, a favorable regional mix and, above all, smooth project execution paid off. Operations are also running more efficiently. Delivered capacity increased by a quarter to 3,504 megawatts. The offshore segment performed particularly strongly: here, deliveries more than doubled from 320 to 776 megawatts.

However, things aren’t running entirely smoothly yet. In the service business, quarterly revenue fell by 5.5% to EUR 896 million, and the margin dropped from 17.2% to 16.6%. The ongoing restructuring and efficiency program is expected to be completed by the end of 2026, however. The service business’s massive order backlog of EUR 40.9 billion—with an average contract term of 11 years—is providing a boost.

Forecast with room for growth

Following a strong quarter, Vestas has raised its profit forecast. For 2026, an EBIT margin of 7% to 9% before special items is now expected; the previous guidance had been 6% to 8%. The revenue forecast of EUR 20 to 22 billion remains unchanged. Some analysts consider the new target range to be rather conservative and believe a further upward revision is possible in the remainder of the year. This is particularly true given that demand remains strong. Vestas points to the growing global importance of energy security and affordable electricity supply. Management itself is also expressing confidence. A new share buyback program worth EUR 400 million brings the total buyback volume for the current year to EUR 650 million.

Investment Solution

On the stock market, the operational turnaround has already left a clear mark. The breakout above the 100-day moving average has ended the previous sideways phase, and at the same time, the 200-day moving average—which continues to rise—is now far away again. Although profit-taking is to be expected in the short term following the sharp price jump, technical momentum suggests that prices will continue to rise.

Momentum traders can therefore jump on the Vestas stock. Investors with a particularly high risk tolerance can bet on a further rise via the Société Générale Unlimited Turbo warrant listed on SwissDOTS (ISIN DE000FD52WT3). The call currently has a leverage of 3.1. The strike price is DKK 138.4240, and the stop threshold is DKK 146.30. The leverage ensures that price movements in Vestas stock have a disproportionately large impact on this product, which has an unlimited term—though this applies in both directions. If the stop threshold is reached, losses up to the amount of capital invested are possible. Therefore, this warrant is suitable exclusively for speculative investors with a corresponding risk tolerance.