The meltdown in renewable energy stocks continues The meltdown in renewable energy stocks continues The meltdown in renewable energy stocks continues

The meltdown in renewable energy stocks continues

Equities 5 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  Our renewable energy basket is the worst performing basket over the past week down 5.1% with Brookfield Renewable Partners being the worst performing stock in the basket down almost 21% last week. The bad performance is despite the industry players reiterating their outlooks and analysts remain extremely bullish.

Key points in this equity note:

  • Saxo’s renewable energy basket is the worst performing basket over the past week down 5.1% and also the worst performing basket over the past year. And this is despite the industry players reiterating their outlooks and analysts remain extremely bullish.

  • Brookfield Renewable Partners is the worst performing stock in the basket down almost 21% last week despite reiterating their strong outlook on their Investor Day presentation two weeks ago. In other words, there is breakdown in the trust between green transformation companies and investors.

  • The breakdown in the trust between green transformation companies and investors is clearly driving down Orsted’s share price where investors feel the company failed to help investors understand the factor sensitivities on their wind projects.

Are analysts being blind on the green transformation?

The worst performing theme basket the past week is our renewable energy basket down 5.1% as the meltdown across green transformation stocks continue. Our renewable energy basket is down 28% year-to-date. The biggest contributor to last week’s decline was Brookfield Renewable Partners down 20.8% following the company’s Investor Day a week before reiterating its strong outlook and that growth was looking stronger than ever. A return target of 12-15% was reiterated and capital deployment targets were increased.

While analysts have broadly brought the entire message from Brookfield Renewable Partners and increased their price target (consensus price target is now $33.84 or 64% above the last close), investors are getting increasingly worried about the outlook, multiples and return dynamics amid higher bond yields for longer and high commodity prices. At 16x EV/EBITDA, Brookfield Renewable Partners (BEP) is still priced considerably above the global equity market and given the green transformation a growth premium is expected, but if profitability is getting squeezed the question is whether it makes sense with these valuation multiples.

Bloomberg’s default risk model still has BEP at investment grade which is also confirmed in BEP’s corporate bonds with its Jan 2030 bond trading at a yield-to-maturity of 5.79% which is still a small credit spread on the same USD government bond maturity.

Saxo's renewable energy basket | Source: Bloomberg

If we take a look at the stocks in our renewable energy basket then it is remarkable to see how high consensus price targets are in this segment. It is actually becoming a bit laughable because it almost feel like analysts covering these stocks will not admit that there have been a regime shift in valuation of green transformation assets. The big disconnect between consensus price targets and the current stock prices of renewable energy stocks does not help on investor confidence. Actually, quite the opposite.

In Europe, the poster child for the decline in green transformation stocks has been Orsted which is down another 3% today taking the drawdown from its all-time-high to 74% and down to levels not seen since 2018. Here the downward pressure on the stock price has been amplified by what the market thinks is breakdown in management’s integrity and company’s lack of ability to guide investors in key factor sensitivities to their wind projects.

Orsted share price | Source: Saxo

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.