BofA raises European utilities EPS outlook, ups Verbund, ERG to 'neutral'
BUZZ-BofA raises European utilities EPS outlook, ups Verbund, ERG to 'neutral' ** Bank of America lifts its earnings per share (EPS) estimates across European utilities on higher gas price expectations, upgrading both Austria's Verbund VERB.VI and Italy's ERG ERG.MI to "neutral" from "underperform"
** The brokerage now forecasts the benchmark European TTF natural gas price TRNLTTFMc1 to reach €55/MWh in 2027, citing "ongoing Qatar disruption, higher Asia demand, low storage, winter uncertainty"
** Given higher gas and power price curves, it sees Verbund's EPS forecast around 10% higher than its previous estimate for this year, and up nearly 25% in 2027
** It also expects investment deductibility to mitigate domestic windfall tax effects on the power provider, though noting limited visibility on Austrian taxation
** BofA also lifts ERG's 2027 core profit (EBITDA) estimate by 5%, with significant upside left for end-2026 should El Niño bring higher power generation into Q4
** It highlights both SSE SSE.L and RWE RWEG.DE, rated at "buy," as firms likely to deliver "strong" results in November, with significant potential for 2027 EPS upgrades
COMPANY | RATING | OLD RATING | PT | OLD PT |
SSE SSE.L | Buy | \ | GBp 2,770 | GBp 2,660 |
RWE RWEG.DE | Buy | \ | €76.0 | €73.0 |
Verbund VERB.VI | Neutral | Underperform | €65.0 | €61.0 |
ERG ERG.MI | Neutral | Underperform | €23.0 | €19.0 |
(Reporting by Mirko Miorelli and Danny Callaghan)
((Mirko.Miorelli@thomsonreuters.com))
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