SSE PLC (LSE:SSE)'s earnings this year are likely to dented by the sharp drop in UK power prices in recent weeks, Deutsche Bank said, leading it to trim medium-term earnings forecasts and its share price target ahead of the renewable electricity generation group's results on Thursday.
Power prices have "dropped quite sharply since the beginning of the year and forward spark spreads have decreased", the bank said, adding that each of these factors are "moderately unhelpful" for SSE's earnings.
Marking to market its forecasts to include the impact of these changes, as well as factoring in the latest network revenue profiles from regulator Ofgem, Deutsche lowered its average earnings per share estimate and its 2026/27 forecast by 7%.
As a result, its share price target was cut to 1,950p from 2,050p, though still well above the last close price of 1,679p.
For 2023/24, while there is some uncertainty, the bank expects SSE to maintain its EPS guidance at Thursday's trading update of at least 150p, which would be below the Bloomberg consensus of 159p.
For 2026/27 - the year of SSE's medium-term guidance - Deutsche now forecasts EPS marginally below the low end of its 175-200p guidance range but in line with consensus of 171p.