BROKERWATCH Verbund started 'equal-weight' at Morgan Stanley; target 54 euros

Wednesday, July 23, 2008; Posted: 02:20 AM

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LONDON, Jul 23, 2008 (Thomson Financial via COMTEX) -- MS | Quote | Chart | News | PowerRating -- Morgan Stanley has initiated coverage on Verbund with an 'equal-weight' rating and 54 euros price target, dealers said.

In a note, the broker said it likes the electricity company for its clean, low-cost power production and healthy balance sheet.

However, it thinks the shares appear fairly valued on both its sum-of-the-parts valuation and peer-group comparable multiples.

Noting that the shares are trading at a price-to-earnings multiple of 14.7 times and EV/EBITDA of 9.4 on its 2009 estimates, Morgan Stanley said this is a 7 percent and 20 percent premium to the sector average and roughly in line with other clean generators.

Although it sees upside risk to consensus earnings forecasts based on currently high forward power prices, it said it prefers stocks where it sees significant potential upside even in a lower power price environment, such as E.ON and EDF. hannah.benjamin@thomsonreuters.com hmb/jfr

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For full details on Morgan Stanley (MS) click here. Morgan Stanley (MS) has Short Term PowerRatings of 6. Details on Morgan Stanley (MS) Short Term PowerRatings is available at This Link.

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