Sector Snap: Analyst sees wind power mergers ahead

NEW YORK (AP) — The wind power sector is ripe for consolidation and investors may want to start eying potential take-out targets, Jefferies & Co. said in research note published Friday.

One reason is the depressed share prices for wind companies right now, said analyst Gerard Reid.

And the catalyst for a buying spree may arrive in increasing orders in coming months as wind power gains traction in the marketplace. That doesn't mean their profits will rise.

Wind power companies are cutting deals in a race to win market share, promising to lower their rates in return for higher payments later if they end up beating their production targets. That might help them win long-term sales, but it will likely hurt their profit margins in the short-run, Reid said.

With profits and stock prices dampened, mergers and acquisitions will likely heat up, Reid said. That could be good for investors that get in early and choose their stocks wisely.

Reid pointed to European company Vestas as a possible takeover candidate.

"If the market continues to discount Vestas prospects, it could be the next to go," Reid wrote. Other firms that could participate in the mergers would be industrial conglomerates Siemens AG and General Electric Co., Reid said.

International firms that could be players are China Ming Yang Wind Power Group, Gamesa, Suzlon, Repower, Nordex, Goldwind, and Sinovel.

Shares of Siemens AG fell 21 cents to $127.65 in midday trading. General Electric Co., which has a large wind power division, fell 19 cents, or 1 percent to $17.92.

China Ming Yang Wind Power Group fell 5 cents, or nearly 1 percent, to $5.16.

source: http://news.yahoo.com/sector-snap-analyst-sees-wind-power-mergers-ahead-180621024.html;_ylt=AiAkyMDO8A5T41W0upJrhG8S.MwF;_ylu=X3oDMTM5dWw5ZDl2BHBrZwMzNjQxZGU2Mi1hN2Q3LTM3MjAtODIwZS05YmY3ODAwMzBiODAEcG9zAzEEc2VjA01lZGlhVG9wU3RvcnkEdmVyAzlkNDhmM2UwLWJhMGQtMTFlMC1hZGM3LTNmY2QyZTMwN2YyMQ--;_ylg=X3oDMTFzMnBqYnA4BGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANzY2llbmNlfGVuZXJneQRwdANzZWN0aW9ucw--;_ylv=3