UPDATE 2-Wind turbine maker Vestas outlook brighter as prices stabilise

* Vestas says prices have stabilised

* Shares rise on upbeat comments

* Third-quarter profit below forecast (Adds CFO, analyst, shares)

COPENHAGEN, Nov 7 (Reuters) - Wind turbine maker Vestas said on Wednesday it expected higher sales and activity levels next year as immense pricing pressure in the industry eases.

The wind industry has suffered a steep decline in prices the past years as subsidies taper off and governments opt for more competitive contract tenders.

However, Vestas said prices had now stabilised, echoing comments made by its main rival Siemens Gamesa which set the bar high on Tuesday when it said it expected a 10 percent rise in sales next year.

“We are very happy with the development in pricing, we see that prices are definitely stabilised,” Chief Financial Officer Marika Fredriksson told Reuters.

The upbeat comments on pricing overshadowed below-forecast third-quarter profit and Vestas shares rose 4.3 percent though they slightly lagged Siemens Gamesa shares which were up around 5 percent.

Vestas’ order intake in the third quarter came with an average selling price of 0.78 million euros per megawatt, compared with the 0.72 million expected by analysts and the 0.71 million achieved in the second quarter.

“This confirms that the price pressure in the industry is on the decline, there is a stabilisation, and Vestas is on its way towards record high activity levels in 2019,” Sydbank analyst Jacob Pedersen, who kept his ‘buy’ rating, said.

Vestas sales grew 2.5 percent in the quarter, while operating profit before special items fell 22 percent to 276 million euros ($316.13 million), lagging a forecast for 285 million in a Reuters poll of analysts.

Siemens Gamesa reported on Tuesday a 12 percent rise in revenues for the July-September period.

Vestas’ wind turbine orders in the quarter rose 25 percent to 3,261 megawatt (MW), slightly below the 3,330 MW expected by analysts, bringing its order backlog to an all-time high.

Vestas said it now expects 2018 free cash flow of minimum 100 million euros from a previous guidance of minimum 400 million, due to “higher total investments and an increased activity level resulting in higher net working capital”.

It kept its forecast for revenues of 10-10.5 billion euros this year and an EBIT margin before special items of 9.5-10.5 percent.

($1 = 0.8731 euros)

Reporting by Stine Jacobsen, editing by Louise Heavens and Emelia Sithole-Matarise