On Thursday, Deutsche Bank analysts adjusted their financial outlook for Verbund (VIE:VERB) AG (VER:AV) (OTC: OEZVY), a leading Austrian energy company. The price target for the company’s shares was lowered to €60.00 from €62.00. Despite this change, the firm maintained its Sell rating on the stock. According to InvestingPro analysis, the company currently trades at a P/E ratio of 12.24 and maintains a "GREAT" financial health score, with particularly strong marks in profitability metrics.
The revision comes ahead of Verbund’s first-quarter results, expected to be announced on May 14, 2025. Analysts at Deutsche Bank predict that the results will show a significant impact from poor hydrological conditions, with the hydro coefficient in the first quarter reported at 0.83. This figure indicates suboptimal water supply for hydroelectric power generation. Moreover, conditions have reportedly worsened in April, suggesting further deterioration in hydro production.
In contrast, Deutsche Bank forecasts a strong performance from Austrian Power Grid (APG) in the first quarter. Despite this, the bank estimates that Verbund’s EBITDA (earnings before interest, taxes, depreciation, and amortization) will be around €713 million, marking a 19% decrease year-over-year. Net profit is also expected to fall by 22% year-over-year to €394 million. For context, InvestingPro data shows the company generated $3.58 billion in EBITDA over the last twelve months, maintaining a robust gross profit margin of 51.66%.
The bank has also adjusted its earnings per share (EPS) predictions for the coming years, reducing them by approximately 7% for 2025 and 2026, and by roughly 14% for 2027. These revisions are primarily attributed to the anticipated impact of windfall taxes. Deutsche Bank now includes an expected €100 million per year windfall tax at the EBITDA level from 2025 to 2030 in its forecasts.
Additionally, the bank anticipates a lower EBITDA contribution from pumped storage over the decade and projects a flat profile for this segment. This outlook follows comments made during the full-year results announcement. As a result, Deutsche Bank’s forecast for Verbund’s 2025 EBITDA now stands at €2.87 billion, which is within the company’s own guidance range of €2.7 to €3.3 billion. Despite these challenges, InvestingPro data reveals the company’s strong fundamentals, including 26 consecutive years of dividend payments and a healthy balance sheet with moderate debt levels. InvestingPro subscribers have access to 8 additional key insights about Verbund’s financial strength and market position.
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