Wartsila Beat Profit Forecasts, Driven by Strong Demand for Energy Solutions; Shares Fairly Valued

Narrow-moat Wartsila beat company-provided third-quarter profit estimates with revenue and order intake as expected. Wartsila’s energy storage solutions was the driver behind the outperformance, despite the group’s important cruise segment still being affected by the coronavirus pandemic. Management expects next quarter’s demand to be considerably better than last year's demand as cruise utilization rates and vessel contracting improves, which supports higher service activity. The market is impressed by these results and the favorable outlook, which sees the stock up 9% on the day. We maintain our EUR 10.2 fair value estimate and view shares as fairly valued.