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The share price story for the wind sector over the last three months is not pretty. Shares in all but one of the four leading publicly listed turbine manufacturers remain depressed after they fell sharply in the last three months of 2002 -- the result of a series of profit warnings. Over the last three months, their shares have fallen by an average of 36% (largely due to Nordex, whose shares have fallen 75% since early January). By contrast, stock market indexes fell by only 15%.

The stagnant state of the market has effectively closed it for new issuance of stock and investors appear to be staying away from buying. While stock prices have fallen, analyst recommendations have, with the exception of Nordex, remained largely unchanged in the last three months, with 41% issuing a "hold" recommendation, 32% "buy" and the remainder advising investors to sell. The announcement by Vestas of its 2002 results last month sparked a sharp surge in its share price (up 44%), but whether this is a "relief rally" only has yet to be seen. Vestas' share price is still down on three months ago and in the main analysts' recommendations for it remain on "hold."

By mid March, Vestas' share price rally had not materially lifted the share price of its publicly traded peers, further suggesting the rally is less about Vestas' bellwether status for the industry and more about a pricing readjustment specific to Vestas. Central to the future price performance is the US market and the performance of the turbine manufacturers over the next few months in particular. The industry is still at a stage where the decision, or not, to award a few large orders, and the choice of which company they are awarded to, has a material impact. This alone makes the sector harder to predict than others. Many commentators are looking on company business and market updates, specifically on progress in the US, as critical in the next few months.

Long term growth and profitability prospects for the wind sector are fairly good across the board of market watchers. Investors, though, are far more focused on the immediate questions of whether companies will be able to match production capacity with demand and deliver consistent, credible returns.

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