On Tuesday, CFRA maintained a Hold rating on National Grid (LON:NG) (NYSE:NGG) but raised the stock's price target from $70.00 to $73.00. The adjustment is based on a forward price-to-earnings (P/E) ratio of 15.1 times for the fiscal year ending March 2025, aligning with the company's five-year forward P/E average of 15.4 times. CFRA's earnings per share (EPS) forecasts for National Grid remain unchanged.
The revision follows National Grid's investor presentation in May, where the company announced plans to increase its investment to approximately £60 billion over the next five years until the fiscal year 2029.
Alongside this investment, National Grid intends to undertake a fully underwritten equity raise of £7 billion to keep its regulatory gearing below 60%. These developments initially led to a correction in National Grid's share price due to anticipated share dilution but the stock has since shown recovery over the past three months.
CFRA believes that the substantial investments planned by National Grid are in line with the crucial role electricity infrastructure plays in achieving net zero targets. Furthermore, the firm notes that National Grid's business model is highly regulated, which provides a shield against price and volume risks, potentially reinforcing the company's defensive market position.
In summary, the revised price target reflects CFRA's recognition of National Grid's strategic investments and its stable, regulated business model, while the Hold rating indicates a neutral stance on the stock's current valuation and prospects.
In other recent news, National Grid has seen a flurry of activity from analysts. JPMorgan has reduced its price target to GBP12.00 from GBP12.75, but maintains an Overweight rating, citing the company's potential to capitalize on network growth opportunities. Meanwhile, Barclays also adjusted its price target for National Grid, reducing it to GBP11.20 while emphasizing the company's robust asset growth.
Goldman Sachs upgraded National Grid's stock from Neutral to Buy, setting a new price target of GBP10.59. The upgrade followed a reassessment of the company's strong financial standing and market position. Citi also upgraded National Grid's stock rating to Buy from Neutral and raised the price target to GBP9.85, highlighting an improved outlook.
RBC Capital, while maintaining an Outperform rating, cut the price target for National Grid shares to GBP11.25, citing adjustments in the company's investment strategy.
InvestingPro Insights
As National Grid (NYSE:NGG) continues to navigate through its strategic investments and maintains its emphasis on a stable, regulated business model, recent metrics and insights from InvestingPro provide additional context for investors. According to InvestingPro data, National Grid boasts a market capitalization of approximately $64.23 billion, and a Price/Earnings (P/E) ratio that stands at 15.99, reflecting investor sentiment on the company's earnings potential. Notably, the company has demonstrated a strong performance over the last three months, with a price total return of 14.85%, signaling positive investor confidence.
InvestingPro Tips highlight that National Grid has not only raised its dividend for five consecutive years but also pays a significant dividend to shareholders, with a current dividend yield of 7.41%. This is underscored by the company's impressive track record of maintaining dividend payments for 29 consecutive years, a testament to its financial resilience and commitment to returning value to shareholders.
For investors seeking a deeper dive into National Grid's financial health and future prospects, InvestingPro offers a comprehensive suite of additional tips. These insights are designed to guide investment decisions with a detailed analysis of the company's performance metrics and market position. As of now, there are over five additional InvestingPro Tips available, which can be accessed for further expert analysis on the company's outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.