On Friday, Enel (BIT:ENEI) SpA (ENEL:IM) (OTC: ENLAY) received an upgrade in its stock rating by Jefferies from Hold to Buy, with a new price target set at €8.00, an increase from the previous €6.50. The revision reflects an optimistic outlook based on the company's recent performance and market position.
The upgrade follows a reassessment of Enel's projected earnings per share (EPS) for the fiscal years 2024 to 2026, which Jefferies increased by 4%. This adjustment is attributed to a second-quarter recovery in power prices, higher volume assumptions, and strong retail earnings. According to Jefferies, Enel's current market valuation does not align with its integrated peers, noting that the company is trading at a "sizeable discount."
Jefferies' benchmarking analysis highlighted Enel's strengths, including its business mix, returns, and balance sheet health. These factors contributed to the firm's decision to raise the outlook on Enel's shares.
Additionally, Jefferies pointed to potential long-term benefits for Enel stemming from increased electricity demand driven by data centers. This aspect was noted as a factor that could provide further upside to the company's stock in the future.
The new price target of €8.00 represents a 23% increase from the previous target, indicating a more bullish stance on the part of Jefferies towards Enel's market prospects.
In other recent news, Enel S.p.A. has reported a strong first quarter for 2024, with substantial gains in EBITDA and net income. The company's EBITDA rose to €6.1 billion, a significant increase from the previous year, and net income surged by 45%. These financial improvements were accompanied by growth in renewable production and capacity, with emissions-free production making up over 80% of the total output.
Enel's efficiency program is on track, achieving €300 million in cost reductions. Furthermore, the company is on track to meet its business plan targets and may potentially increase shareholder remuneration.
Despite missing its 2023 emissions target due to unforeseen factors, Enel's efficiency program has progressed better than expected, with €300 million in savings achieved in nine months.
In terms of future projections, Enel anticipates a €70 billion balance to full-year EBITDA, with significant contributions expected from Europe, particularly Italy and Iberia.
The company also projects a €350 million EBITDA increase from asset disposals, in addition to the guidance provided on Capital Market Day. Lastly, Enel's executive Stefano De Angelis indicated potential increases in dividends per share.
InvestingPro Insights
In light of Jefferies' recent upgrade of Enel SpA's stock rating, a look at the real-time data from InvestingPro provides further context to the company's financial landscape. Enel's adjusted market capitalization stands at $74.92 billion USD, with a P/E ratio of 16.55, reflecting the market's valuation of the company's earnings. Notably, the adjusted P/E ratio for the last twelve months as of Q1 2024 is 12.69, suggesting an improved earnings outlook over the past year. Additionally, the dividend yield as of the specified date in 2024 is an attractive 5.13%, which is particularly relevant considering the company's track record of raising its dividend for 10 consecutive years, as highlighted by InvestingPro Tips.
InvestingPro Tips also point out that Enel has maintained dividend payments for 25 consecutive years, underscoring its commitment to shareholder returns. Moreover, the stock has shown a strong return over the last three months with a price total return of 18.45%. This performance aligns with Jefferies' optimistic outlook and may interest investors looking for stable dividend-paying stocks in the Electric Utilities industry.
For readers seeking a deeper analysis and additional insights, InvestingPro offers more tips on Enel SpA. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further valuable information to guide investment decisions. There are 11 additional tips available on InvestingPro for Enel, which could be particularly useful for those considering the company's promising market position and growth prospects.
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