SSE Plc has revised its full-year adjusted earnings-per-share guidance to a tighter 147-152 pence range, signalling a move toward the upper end of its earlier 144-152 pence band. The company made the update on Thursday as it disclosed a substantial increase in network capital spending.
For the year ended March 31, SSE reported capital investment of approximately 3.5 billion, an increase of about 60% year-on-year. The update also reiterated expectations that adjusted net debt and hybrid capital will be just over 10 billion at the financial year end.
The company said five of its 11 major electricity transmission projects are now in the construction phase, and 26 of the 34 major consents it requires have been secured. Separately, SSEN Transmission last month accepted Ofgem 27s RIIO-T3 Final Determination.
Renewable generation output rose by about 10% year-on-year to roughly 14.5 terawatt-hours. SSE attributed the increase primarily to added capacity from its construction programme, but noted that mixed weather conditions during the year partially offset those gains.
Aside from the narrowed EPS range and the updated capital and debt figures, the company said all other forward guidance previously provided remains unchanged. SSE also said it continues to monitor developments in the Middle East but that there has been no material impact on group performance to date.
Broker response and forecasts
Morgan Stanley raised its price target on SSE to 2,950 pence from 2,700 pence while maintaining an "overweight" rating. The brokerage's analysts put their estimate for full-year EPS at 149 pence, versus a consensus figure of 148 pence. They projected end-year net debt of 10.2 billion, above a consensus of 9.5 billion.
For FY2027, Morgan Stanley forecast EPS of 182 pence, compared with a consensus of 182.5 pence, and kept longer-dated EPS projections of 232 pence for FY2029 and 242 pence for FY2030. Those longer-term figures align with SSE's guidance range of 225-250 pence for FY2030. Morgan Stanley also noted that SSE's company guidance range for FY2027 of 161-184 pence remains unchanged.
The analysts valued SSE at 13 times its 2027 calendar-year price-to-earnings ratio and said their 2,950 pence target implies a re-rating to 17 times, which they said is comparable to Elia trading at 18 times. Morgan Stanley's upside scenario for the stock stands at 3,400 pence, with a downside case at 2,100 pence.
Market data
SSE shares closed at 2,676 pence on April 1, trading inside a 52-week range of 1,468 pence to 2,763 pence, giving the company a market capitalisation of 28.8 billion.
The company 27s combination of stepped-up network spend, targeted construction progress and stable guidance on earnings has garnered attention from analysts, while management continues to flag monitoring of geopolitical developments even though no material effect has been reported so far.