Will Vestas (CPSE:VWS) Leverage Long-Term Service Deals to Strengthen Its Competitive Position in Europe?

• Vestas Wind Systems recently announced an order from Energiekontor AG for 13 V162-7.2MW turbines for the Haberloh & Heidkrug project in Germany, including a 20-year AOM 4000 service agreement, with deliveries planned for 2027.
• This long-term contract not only adds to Vestas' project backlog but also highlights continued demand for advanced wind turbine technologies in Europe.
• We'll explore how this major German order, with its long-term service component, may impact Vestas Wind Systems' investment narrative going forward.

Find companies with promising cash flow potential yet trading below their fair value.

Vestas Wind Systems Investment Narrative Recap

To be a shareholder in Vestas Wind Systems, you need to believe that continued supportive policies and demand for renewable energy will drive expanding order books and future profitability, despite margin pressure from cost challenges and global competition. The latest German order helps reinforce mid-term visibility for Vestas’s onshore projects and service revenues, but by itself does not materially shift the main short-term catalyst, the pace of new order intake, or ease the most pressing risk, which remains margin compression from offshore segment losses and pricing pressure.

The most relevant recent announcement is Vestas’s additional German contract for 86 MW with WestfalenWIND, also involving a long-term service agreement and next-generation turbines. Seen beside the Haberloh & Heidkrug deal, this order further cements Vestas’s strong project pipeline in Europe, underscoring steady order activity, a crucial catalyst that could build confidence around short-term revenue trends as policy uncertainty lingers in other regions.

Yet, in contrast, it is important for investors to remember that higher offshore ramp-up costs and persistent pricing pressure continue to weigh on Vestas’s...

Read the full narrative on Vestas Wind Systems (it's free!)

Vestas Wind Systems' narrative projects €23.1 billion in revenue and €1.3 billion in earnings by 2028. This requires 7.6% yearly revenue growth and a €538 million earnings increase from the current €762 million.

Uncover how Vestas Wind Systems' forecasts yield a DKK140.61 fair value, a 22% upside to its current price.

Exploring Other Perspectives

Ten members of the Simply Wall St Community valued Vestas between DKK102.43 and DKK187.65, with diverging expectations about its recovery. Many focused on the company’s exposure to order flow risks, highlighting why keeping an eye on project backlogs and service agreements can shape future market sentiment.

Explore 10 other fair value estimates on Vestas Wind Systems - why the stock might be worth 11% less than the current price!

Build Your Own Vestas Wind Systems Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Vestas Wind Systems research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Vestas Wind Systems research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Vestas Wind Systems' overall financial health at a glance.

Searching For A Fresh Perspective?

Our daily scans reveal stocks with breakout potential. Don't miss this chance:

• AI is about to change healthcare. These 31 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.
• Trump's oil boom is here - pipelines are primed to profit. Discover the 22 US stocks riding the wave.
• Explore 25 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com