Fortum: Good results with hydropower
Q3 results exceeded our expectations, but a sharp decline in electricity futures (over 20%) weighed on earnings forecasts for the coming years (around -15%) despite the company’s operationally good performance. Still, Fortum is able to maintain a good earnings level especially with hydropower, and as society becomes more electrified, we believe the demand outlook supports even higher electricity prices in the future. We believe the stock is cheap (2024e P/E 11x) and underpriced also relative to peers.
