Barclays names top picks for European utilities, with focus on US exposure

Elia SA

01/10/2024 10:03

** Barclays remains positive on European utilities  .SX6P 
which have rallied 12% so far in H2 2024, and adjusts its top
picks to factor in "underappreciated" U.S. exposure
    ** It says the market is unjustly ignoring European
utilities' large presence in the U.S., where data centres and AI
drive sustained power demand growth
    ** Its top names for U.S. exposure are National Grid  NG.L 
and Veolia  VIE.PA  from regulated utilities and RWE  RWEG.DE 
from renewables
    ** Integrated utilities is its most preferred sub-sector,
with Enel  ENEI.MI , EDP  EDP.LS  and SSE  SSE.L  as the top
names
    ** Regulated utilities comes second, with E.ON  EONGn.DE ,
Redeia  REDE.MC  and Elia  ELI.BR  also among top picks, set to
benefit from future growth capex and rising returns
    ** For renewables, the least preferred sub-sector, Barclays
sees limited growth opportunities due to grid connection
bottlenecks and increasing congestion costs
    ** It raises Spain's Naturgy  NTGY.MC  to "equal weight"
from "underweight", noting its high sensitivity to increases in
combined-cycle gas turbines' (CCGT) load factor
    ** It cuts Acciona  ANA.MC  to "underweight" from "equal
weight" following a YTD rally, and to lessen the broker's
exposure to the cyclical activities in the construction business

 (Reporting by Marta Serafinko)
 ((Marta.Serafinko@thomsonreuters.com))