Citi has downgraded SSE PLC (LSE:SSE) to a 'sell' rating, cautioning investors about potential setbacks in the energy firm’s growth strategy.
Despite SSE’s strong portfolio in renewables and energy networks, the investment bank expressed concerns over delays in deploying offshore wind projects, which could impact the company’s earnings per share and overall returns.
SSE relies heavily on revenue from power sales, with around half of its renewable energy output tied to market prices, making the company vulnerable to fluctuations in energy costs.
Citi analysts also pointed to long-term risks tied to gas and power prices, warning these could cut into merchant earnings, which make up 15% of the company’s overall profit.
The report also highlighted concerns over SSE’s financial position, suggesting its balance sheet may struggle to support future growth and keep energy bills affordable without a drop in commodity prices or more government support.
In early trading, the stock was down just under 1% at 1,833p.