Greencoat UK Wind (UKW) has received a hefty target price upgrade from broker RBC on the back of much higher electricity prices so far this year.
Since mid-April, power prices have risen by an additional 30%, notes the broker, putting UKW’s own price assumptions at a 60% discount to forward prices.
This will translate into higher cash flows for the UK’s largest onshore wind farm group, says RBC, and worth on an aggregated basis (NPV) £550m or 25p/sh by mid-decade.
On that basis, RBC’s estimate for NAV at year-end 2022 rises to 175p/sh or 25p/sh above UKW’s stated first-quarter NAV.
“On a full M2M (mark to market) basis, we see scope for +£1.3bn of cashflows (60p/sh).
“Our PT moves to 200p/sh, reflecting a 15% premium to our Dec-22E NAV, and we reiterate our outperform rating.”
Shares rose 0.4% to 156.2p.