Fortum OYJ (FORTUM.HE): New strategic partnership paints a stronger outlook; Upgrade to Neutral

Research evidence excerpt

Equity Research

10 September 2026 | 5:03AM BST

Fortum OYJ (FORTUM.HE)

New strategic partnership paints a stronger outlook; Upgrade to Neutral

FORTUM.HE

12m Price Target: €25.50

Price: €24.74

Upside: 3.1%

New PPA announced at Loviisa nuclear power plant a sizable

positive. Yesterday, Fortum announced that it has entered a

strategic partnership with Google in Finland. This included a 22-year

life extension Power Purchase Agreement (PPA) for 50% of the

capacity of its Loviisa nuclear power plant through to 2050 (i.e.

500MW). The PPA is expected to increase Fortum’s Group

comparable return on net assets (RONA) by approximately 1.4

percentage points. This would imply a €127m pa improvement in

return and a power price uplift of €32/MWh uplift, equivalent to

contracting at 1.6x the current 2030 Finish power price. Mark to

mark the power curve and adding the new terms of the PPA add

c.30% to our EPS by 2030. In addition, it increases the hedged share

of rolling 10 yr for outright generation volume to 25% which has a

benefit to the cost of capital via higher contracted earnings.

More visibility & higher cash flows for future investment.

Alongside the PPA announcement, Fortum & Google have

established a Memorandum of Understanding (MoU) on the

development of new nuclear, renewable capacities and flexibility

solutions, and energy portfolio management services. With the

stronger EPS outlook we see the balance sheet to invest increasing

by c.€2bn with a higher probability of value creation through the

development of Fortum’s organic pipeline. Fortum targets 150bps

to 400bps on new investments and has 8GW of renewables in its

development portfolio.

Upgrade to Neutral from Sell, New price target €25.5/share. Post

the announcement we raise our price target to €25.5/share from

€16.5/share driven by estimate changes and additional value for

reinvestment (c.€3bn). The stronger earnings power & investment

prospects improves the risk reward profile and is before potential

upside from 5GW of potential site development solutions (both

Industrial & Datacenter).

NEUTRAL

Ajay Patel

Goldman Sachs International

Lawrence Lavizani

Goldman Sachs International

Alberto Gandolfi

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