Iberdrola, the Utilities sector company, was revisited by a Wall Street analyst today. Analyst Alberto Gandolfi from Goldman Sachs downgraded the rating on the stock to a Hold and gave it a €20.50 price target.
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Alberto Gandolfi has given his Hold rating due to a combination of factors related to Iberdrola’s relative positioning versus its peers. Iberdrola has a long record of delivering steadier and faster earnings growth than most utilities, which historically justified investors paying a valuation premium for the shares.
However, the accelerating need for grid upgrades and rising electricity demand are now boosting the growth prospects of other European utilities that trade at cheaper valuations. With his target price of €20.5 already close to the current share price, Gandolfi sees only modest room for further gains and therefore shifts to a more neutral stance while still recognizing the company’s solid underlying fundamentals.
In another report released yesterday, Exane BNP Paribas also downgraded the stock to a Hold with a €20.00 price target.