The share price plunge following SSE PLC’s (LON:SSE) profit warning last week presents an excellent buying opportunity, according to Deutsche Bank (DB).
SSE warned that it currently expects its adjusted operating profit for the six months to 30 September 2018 will be around half of that delivered in the same period in 2017 due to the warm summer and high wholesale gas prices.
READ: SSE warns of halving first-half adjusted operating profit due to warm summer, high gas prices
That sent the share price plummeting – it now trades at around 1,121p, compared to 1,250p before the profit warning – and DB’s recommendation is to get your skates on and buy some.
“SSE's shares have been marked down following last week's profit warning yet we think underlying value has gone up since May. The impact of Ofgem's retail price cap now looks priced in while rising gas prices should increase long-term generation value despite causing short-term trading losses,” the bank argued.
Steve Atkins from @SSE We've over 450,000 vulnerable customers on our Priority Services Register. Innovation is key to how we develop our network for customers. Need to ensure smart grids work for everyone, not just customers who're better off.
— NEA (@NEA_UKCharity) September 19, 2018
It has moved to ‘buy’ from ‘sell’ and increased its target price to 1,250p from 1,200p.
“We believe that SSE's networks and renewable generation are fundamentally good businesses,” it said.