Despite SSE underperforming the wider UK utility sector on the news that its Chief Executive Officer (CEO) is leaving, Credit Suisse has kept its 'outperform' recommendation for the shares, saying that value-creation is expected to continue.

The company announced on January 23rd, that its CEO of more than 10 years, Ian Marchant, is stepping down; he felt the "time was right" to resign as he was ready for a change. Shares have since fallen 2.9%.

Credit Suisse said it expects no change in the SSE business strategy despite Marchant's departure, "nor does there need to be". It noted that the board's criteria for selecting a new frontman was a "commitment to the dividend".

The broker still forecasts growth in generation earnings, saying that UK power prices will rise: "we expect increased CCGT [Combined Cycle Gas Turbine] running in the UK to cause higher clean spark spreads and potentially increased gas consumption. CO2 tax rises being passed through into power prices also helps".

Furthermore, Credit Suisse believes that cash flows remain strong and the balance sheet is still under control.

Ahead of the company's third-quarter trading update on January 31st, the broker said it expects a 6.2% growth in full-year profits, compared with the company-supplied consensus estimate for a 5.5% increase.

A 1,600p target price for the stock has been maintained.

Shares were flat on Monday, trading just 0.07% lower at 1,385p by 11:19.

BC

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