UPDATE 1-Nomura cuts price targets on European utilities
* Cuts price targets on Fortum, CZE, Verbund
* Upgrades E.ON, RWE
June 20 (Reuters) - Nomura said the power market in central, western Europe is likely to remain depressed due to oversupply, lacklustre demand and lower commodity prices, cutting its price targets on European utilities, including Finland's Fortum OYJ and Germany's RWE AG.
Capacity additions driven by renewable energy will outpace plant retirements, the brokerage said.
Nomura, which cut its power price forecasts by 10 percent to 15 percent for 2013 through 2020, said fixed-cost generators were most affected.
The brokerage cut its price target on Czech Republic-based CEZ, the biggest utility in central Europe, to 735 crowns from 830 crowns. It cut its price target on Fortum to 15 euros from 18.70 euros, and on Austria-based Verbund to 17.50 euros from 22.70 euros.
German utility E.ON is, however, less exposed to the lower power price forecasts given its diversity and proportion of hard coal in the power generation mix, Nomura said, upgrading the stock to "buy" from "neutral."
"RWE offers less upside potential but has some attractions relative to the group that no longer warrant a negative stance," Nomura said, upgrading the stock to "neutral" from "reduce."
RWE trades at a discount to the sector and the integrated sub-group, despite potential catalysts from gas contract renegotiations, the brokerage said.
It cut its price target on RWE to 32 euros from 34 euros.
Shares of E.ON were trading up about 1 percent at 0757 GMT on Wednesday. Shares of Fortum and Verbund were slightly down while those of CEZ and RWE were largely unchanged.
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