Morgan Stanley cuts Redeia to 'equal-weight' on weak EPS outlook

Redeia Corporacion SA

26/03/2026 10:05

** Morgan Stanley downgrades Spanish grid operator Redeia REDE.MC to "equal-weight" from "overweight," seeing zero to very limited earnings per share (EPS) growth to 2028 after a "disappointing" 2026-2029 business plan update

** It says the group's indications for Regulated Asset Base (RAB) and net income trajectory came below the broker's expectations, and mentions a lack of financial targets beyond 2029

** "Redeia's EPS growth should accelerate post 2028, but this seems too far for now," Morgan Stanley adds

** It sees low growth despite Redeia's very defensive business exposure that should limit downside to the current share price in the ongoing uncertain market environment

** MS forecasts about 5.5% total shareholder return per year on average during 2025-28 after adjusting for hybrid issuances, significantly below regulated peers at around 12%

** The broker also flags debt refinancing cost headwind impacting Redeia mainly in 2026–28

** Its top picks in the sector are National Grid NG.L, followed by Elia ELI.BR, E.ON EONGn.DE and Pennon PNN.L on better earnings per share growth prospects

** However, the broker keeps its preference for Redeia over Enagas ENAG.MC, given Enagas shares' recent significant outperformance despite entering a regulatory review

 (Reporting by Gemma Guasch)

 ((Gemma.guasch@thomsonreuters.com))