Shares of Orsted (CSE:ORSTED) rose by over 4% on Monday following an upgrade from Kepler Cheuvreux, which moved the stock from a "hold" to a "buy" recommendation and raised its target price to DKK175 from DKK150. That new target implies a 19.25% upside relative to the February 13 closing price of DKK146.75.
Analyst Ingo Becker reinstated the buy rating after having downgraded the stock to hold in January 2026, at the time the U.S. government halted two of Orsted's offshore production sites. Becker had previously upgraded Orsted in October 2025, a move that followed a share price collapse to DKK119 and an announced cut in capital expenditure.
Kepler Cheuvreux said its revised target price is based on a rolled-forward valuation model that anticipates Orsted approaching a significant capex reduction - described by the brokerage as a "capex cliff" - in 2028. While the firm’s bespoke valuation framework indicates a theoretical full valuation potential of DKK219 per share, the DKK175 target retains a margin that discounts the potential full loss of the two U.S. projects.
The brokerage's investment thesis centers on the view that the expected capex retrenchment beginning in 2028 should expose much stronger free cash flow from Orsted’s offshore and onshore renewable operations, cash generation that has been constrained by heavy expansion spending to date.
Key capex figures cited by Kepler Cheuvreux include reported fiscal 2025 capital expenditure of DKK54.98 billion, which the brokerage noted represented 75.10% of sales. Its projections show capex of DKK52.50 billion for 2026, equal to 60% of sales, and a further reduction to DKK37.52 billion for 2027, or 29.40% of sales.
Kepler Cheuvreux said it made no changes to its financial forecasts in the note. Its forecasts for fiscal 2026 include sales of DKK87.46 billion, adjusted EBITDA of DKK28.53 million, and adjusted EBIT of DKK15.66 billion. For fiscal 2027 the brokerage projects sales of DKK127.78 billion, adjusted EBITDA of DKK32.52 billion, and adjusted EBIT of DKK17.87 billion.
The target price and the firm's valuation approach continue to account for the two U.S. offshore wind projects that were halted in January 2026. Kepler Cheuvreux also cautioned that any change in the U.S. situation could generate volatility in Orsted's share price.
Orsted is identified in the note as the world’s largest developer and operator of offshore wind power. The company has outlined plans for total investments of DKK145 billion across 2025 to 2027, and planned divestments of DKK46 billion over 2025 to 2026. Orsted expects to commission about 8 GW of offshore wind capacity and close to 1 GW of onshore wind and solar capacity by the end of 2027.
The ownership structure referenced in the note shows the Danish State holding 50.10% of the shares, Equinor ASA of Norway holding 10%, Andel A.M.B.A. of Denmark holding 5.01%, and a free float of 34.89%.
Summary
Kepler Cheuvreux upgraded Orsted to buy and lifted its target price to DKK175, citing an approaching reduction in capital expenditure from 2028 that should uncover stronger free cash flow from the company’s renewable assets. The brokerage’s model shows a higher theoretical valuation of DKK219 per share, but the published target keeps a discount to reflect the uncertain outcome of two U.S. projects halted in January 2026. The market responded with a greater than 4% rise in Orsted shares on Monday.
Key points
- Brokerage action - Kepler Cheuvreux upgraded Orsted from hold to buy and raised its target to DKK175, implying about 19.25% upside from the February 13 close of DKK146.75.
- Capex dynamic - The upgrade hinges on an anticipated capex cliff beginning in 2028 that the brokerage expects will surface stronger free cash flow from renewable operations currently masked by expansion spending.
- Sectors impacted - The move has direct implications for the renewable energy and utilities sectors, and secondary effects for capital markets and investors focused on energy infrastructure and project finance.
Risks and uncertainties
- U.S. project risk - The two U.S. offshore projects halted in January 2026 remain a downside factor; Kepler Cheuvreux continues to discount their potential loss in its target price, and any developments could trigger share volatility.
- Forecast sensitivity - The firm’s forecast assumptions on capex reductions and subsequent free cash flow recovery are central to the upgrade; deviations from the projected capex trajectory could alter the investment case.
- Execution and market conditions - Planned investments of DKK145 billion and divestments of DKK46 billion over the stated periods introduce execution and market risks that could affect operational and financial outcomes.