Broker snap: Upside risk at SSE

26th Apr 2011 10:47

Despite the recent strong run in Scottish and Southern Energy (SSE) shares, Credit Suisse thinks that the lead indicators for profitability are still not priced-in, and sees a risk of upgrades."We see power production volumes and spreads increasing, and think the recent electricity market reforms by the government are more supportive for SSE and the industry than many realise," said analyst Mark Freshney.Additionally, the broker thinks that SSE's large capital investment programme in wind - which has had little earnings contribution thus far - will see the first assets coming on-line over the next year. Freshney also notes that the group's low volumes in the year ended March are unlikely to repeat.Credit Suisse keeps its 'outperform' rating and 1,400p target price.---bc