Broker snap: UBS upgrades SSE to 'buy'

31st Aug 2012 09:24

Utilities giant SSE is enjoying 'better growth at lower risks', according to UBS which upgraded its recommendation for the stock from 'neutral' to 'buy' on Friday morning."Thanks to a well balanced asset mix and its UK location, SSE is well positioned to benefit from the UK's renewable generation growth," the broker said."Transmission & distribution should grow thanks to wind connections and de-bottlenecking between Scotland and England. Wind investments are now starting production. Conventional generation profitability could also improve following coal closures, likely to start in 2013."UBS said that SSE's renewable investment programme is about to move from a "balance sheet drag" to an "earnings driver".The broker has raised its target price for the stock from 1,340p to 1,515p, saying that its strong 6.4% dividend yield should help to "put a floor under the company's share price".Shares were flat at 1,379p in morning trade.BC