30th Mar 2023 12:13
(Alliance News) - Analysts are expecting SSE PLC to perform ahead of market forecasts, after it upgraded its guidance for the financial year that ends on Friday.
The Perth, Scotland-based electricity utility now expects adjusted earnings per share of over 160 pence, up 68% from 95.4p in financial 2022 and 6.7% higher than previous guidance of over 150p. The previous guidance was announced at the time of its third quarter trading update in January.
Peel Hunt said that it is forecasting earnings per share of 150.6p, whilst UBS forecasted adjusted EPS of 154.11p.
"This latest increase in guidance reflects the strength and stability of the balance mix of businesses – in particular, continued strong performance from flexible thermal generation, which has more than offset the slightly lower than planned renewables generation output," explained Peel Hunt analyst Nick Walker.
Jefferies also noted SSE's brief market update. It noted "particularly strong performance from flexible generation, which will more than offset the shortfall in output from renewable sources."
SSE said it plans to deliver record investment during the year, in excess of GBP2.5 billion, as part of its 'net-zero acceleration programme'. Peel Hunt, however, said it forecasts investment of GBP2.6 billion.
Further, in line with SSE's five-year dividend plan, the company said it intends to recommend a full-year dividend of 85.7p per share, plus retail price index.
"Thereafter, dividend increases of at least 5% per annum are targeted for 2024/25 and 2025/26," it added.
UBS said that with the latest UK RPI figure at 13.8%, SSE's dividend guidance implies a payout of 97.5p, slightly ahead of consensus currently at 95.7p.
Peel Hunt's Walker said: "We are likely to increase our forecasts in the light of the new guidance, and this, in turn, is likely to lead to a marginal increase in our current 2,060p target price. We maintain our buy recommendation."
Jefferies rates SSE at 'hold', with a target price of 1,830.00p.
SSE shares rose 3.2% to 1,793.50p each on Thursday afternoon in London.
By Sophie Rose, Alliance News reporter
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