The actions of Activate Energy have led the Ibex 35 this Friday after a Morgan Stanley report on the energetic European. Specifically, the North American firm has improved its advice to 'overweight' from his previous neutral advice and figures his target price in 24 euroswhich draws an upside potential of 22%. «The shares have suffered a correction of around 30% due to concerns about the group's high financial leverage and the US elections, as well as the fact that the value creation of renewable energies in general is being questioned by investors. investors and by the negative earnings momentum. Although we continue to see some structural questions in the stock market history of Acciona Energía, we believe that the majority of the negative aspects are well valued and we consider that Stocks' risk-reward profile is skewed to the upside«explain these analysts. The Morgan Stanley report also includes other Spanish utility companies, such as Redeiawhich he lowers from 'neutral' to 'underweight' and places its target price 16 euros (-5% potential). However, these strategists recognize that its story has improved «significantly» in the last 18 months.
The same happens with Endesawhich Morgan Stanley values at 20.5 euroswith advice from 'underweight' and a 3% downside potential due to its «less attractive» with respect to the sector. The American firm also recommends 'underweight' Enagásbut it estimates its price in 13 eurosa valuation that shows a small upside potential of 1%. Instead, Iberdrola and Naturgy better stops come out. The first has received advice from 'overweight', with a target price of 15.5 eurosgiving it a revaluation potential of 16%, while Naturgy receives advice 'neutral' with a target price of 24 euros, which shows an upside potential of 2%. «With some Very balanced risk-return outlook for 2025 Amid multiple uncertainties, we changed our sector opinion to online. We prefer electrical networks, and we would be selective in other sectors,» these analysts explain.
OPPORTUNITIES AND RISKS
In this context, Morgan Stanley identifies three possible catalysts for the sector. On the one hand, they providen decline in US 10-year bond yields of between 40 and 65 basis points (bp), which «should support a revaluation of long-term public services.» Furthermore, the American firm believes that There are interesting options in terms of mergers and acquisitions (M&A, for its acronym in English). Likewise, they consider that the bearish hypothesis of Full repeal of the US Inflation Reduction Act (IRA) appears to be in the cards. «U.S. stocks exposed to renewable energy currently trade at almost zero value for U.S. operations, including operating assets. We believe a limited change to onshore renewable energy tax credits would likely trigger a rally in stocks«, they explain. «The relative risk reward between the accelerated growth of grid values and the higher perceived risk in renewables. Furthermore, we do not expect a major change in the pace of renewable energy development in Europe and we see a growing disparity between public market and private market valuations. The growing European demand for energy, especially through data centersshould provide a useful vehicle to demonstrate value creation in renewable energies,» these analysts add. On the other hand, Morgan Stanley identifies at least three significant risks for the sector. On the one hand, changes in European energy and climate policy due to political instability in the region. According to these experts, the numerous changes of Government in the countries of the European Union (EU) could compromise the 'Goal 55' package of measures signed in 2021, by which the Twenty-seven set a goal of reducing emissions by at least 55% by 2030. «We consider the changes more likely to be politically motivated. This is influenced by the debate on affordability and the impact on economic competitiveness. There is also tax considerations related to governments assuming a more direct role in allocating capital and/or subsidizing support regimes for the green energy value chain,» they point out. However, Morgan Stanley points out that no major changes have occurred yet in energy transition policies, despite political ups and downs. Besides, Nor do they expect the next German elections to «substantially» alter the community patheven if the country became «more flexible about shutting down coal and increasing the likelihood of a nuclear restart.» «From a political point of view we do not expect major changes, especially in Western Europe. We note that the United Kingdom remains committed to the 2030 objectives, Italy is studying a new plan to expand renewable energy and, in Germany, energy policy of the CDU (leading party in the polls) does not foresee changes in the prospects for renewable energies,» they explain. On the other hand, Morgan Stanley points out that commodity prices could fallsince some such as gas are clearly «overbought», and also warns that there may be concerns on the financing side. «Although our preferred securities have stronger balance sheets, we recognize that potential share issuances in 2025 could weigh on their peers if capital rotates towards new offerings,» says the US firm.