Vestas is unlikely to experience a year with significant volume growth, as a large part of the wind turbine manufacturer’s orders in the fourth quarter are for delivery in 2025/26.

At the same time, Vestas still has a number of unfavorable orders in its order book, which could hold back earnings in 2024, says Janne Vincent Kjær, analyst at Danish bank Jyske Bank, in an analysis.

In its annual report on Feb. 7, Vestas is expected to present a revenue guidance of EUR 16-17.5bn and an operating margin, EBIT, of 4-6% in 2024.

Overall, Jyske Bank predicts a weaker new fiscal year for Vestas than reflected in the market consensus.

””We expect an increase in the number of delivered MW of 4% in 2024, which is lower than the consensus of an 11% volume increase,” the analysis states.

”We therefore expect a downside to the consensus for 2024, where our EBIT estimates are just under 8% lower than market expectations,” it continues.

However, Vestas’ earnings power is expected to gradually improve towards 2025 as the quality of the order book improves and the more profitable orders are executed. At the same time, the Inflation Reduction Act (IRA) is expected to boost the expansion of wind energy in the US from 2025 onwards.

Jyske Bank raises its expectations for the wind turbine manufacturer’s earnings in 2025, but ”does not see reason for major adjustments to the estimates for 2024, where we still see a downside to consensus”, writes Janne Vincent Kjær.

Furthermore, Vestas is facing a particularly weak first quarter with a lower-than-normal activity level, according to the assessment.

The price target is raised to DKK 200 (USD 29.23) from DKK 185 (USD 27.04), while the ”hold” recommendation is reiterated.

The financial results for Q4’23 will be published on Feb. 7.

Vestas shares fell 0.9% to DKK 198.22 (USD 28.97) on Monday.

(Translated using DeepL with additional editing by Katrine Gøthler)