Live Markets: Utilities: after the "Big Comeback", now what?

Elia SA

02/10/2024 12:33

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    UTILITIES: AFTER THE "BIG COMEBACK", NOW WHAT?    
    Utilities have had a good run over the past several months,
as falling rates and a more challenging economic outlook
encouraged investors to pour money into this defensive industry.
    Their growing role in the energy transition and in powering 
the data centres behind the AI revolution has made the sector of
interest also for long-term investors. But after this "Big
Comeback", Deutsche Bank wonders what's next.
    The German bank believes the rally and modest earnings
upgrades have taken the shine off the sector's valuation appeal,
meaning a wholesale bet might no longer be the right strategy.
    "Around the lows we argued that the sector offered a 'top 1%
buying opportunity'. However... the sector is again closer to
its long-run norm: P/E parity. This leaves us neutral on the
sector relative to the market, although with some attractive
stock-picking opportunities," DB writes.
    The bank says regulated utilities as most attractive, and it
is buy on National Grid, Italgas, Snam and Elia. Among
integrated utilities, it favours E.ON, Engie and RWE. 
    
    (Danilo Masoni)
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