RWE "buy," target price reduced

25.05.06 - ING Financial Markets

LONDON, May 25 (newratings.com) - Analyst Harold Hutcinson of ING Financial Markets maintains his "buy" rating on RWE (RWE-EUR). The target price has been reduced from ?85 to ?81.

In a research note published this morning, the analyst mentions that despite robust 1Q06 results, the company?s share price has declined in recent weeks due to carbon/power price fluctuations and grid regulation uncertainties. In the short run, RWE remains hedged against carbon price fluctuations due to forward contracts for its output, the analyst says. In the longer run, given a more modest carbon price, German coal plants are likely to strengthen and expand the competitive advantage they enjoy, ING Financial Markets adds.