In a note to clients, the Canadian broker’s analysts said they believe that the recent CMD was disappointing both in terms of near-term earnings drivers and the new base dividends in the RemainCo of 80p per share in the financial year 2020.
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The analysts said its earnings per share (EPS) estimates have been cut by approximately 10%-15% across its forecast horizon and show no long-term growth.
“Even though we are supportive of the retail spin-off strategy and believe the RemainCo could become an attractive M&A target we no longer see the valuation upside to warrant an outperform recommendation,” the analysts at RBC Capitals said.
In morning trading, SSE’s shares fell 0.15% to 1,347.50p.