Energy generator SSE PLC (LSE:SSE) was among firms in favour with Goldman Sachs (NYSE:GS) analysts as the bank honed in on the growing attractiveness of renewable energy.
Discussing SSE’s plan to invest £18bn in renewable infrastructure between 2024 and 2027, Goldman tipped the FTSE 100-listed company could enjoy impressive share price growth.
“We see higher power prices and thermal generation profits adding to the cashflow the company has to invest,” Goldman said in a research note.
“As the pipeline builds, we expect the company to unlock further value, adding to the growth journey ahead.”
As a result, Goldman offered a share price target of 2,431p for the company - a prospective rise of 35% on Wednesday’s close - though volatile power prices and tough regulation could pose a risk.
Taking a wider view on European renewables, Goldman argued that the sector had become an increasingly attractive place to invest.
“We believe the competitive dynamics for renewable energy are steadily improving,” analysts said.
Growing focus on climate change, falling costs of infrastructure and the volatility of fossil fuels due to the energy crisis has prompted renewables to gain traction in recent years.
“Following years of declining returns, the renewable industry is now set to experience a reversal in trends,” the bank added, with sector pricing power likely poised to grow.