Berenberg initiates coverage on RWE stock with Buy rating, $49 target

Investing.com - Berenberg initiated coverage on RWE (OTC:RWEOY), the $29.5 billion energy company trading at $40.40, with a Buy rating and a price target of $49.00 on Friday. According to InvestingPro data, RWE maintains a GOOD financial health score and trades at an attractive P/E ratio of 10.4x.

The research firm cited RWE’s potential to double earnings per share to EUR4 by 2030 as a key factor underpinning the investment case. Berenberg expects RWE to achieve this target through its planned EUR35 billion investment in renewable and flexible generation capacity, along with completing its EUR1.5 billion share buyback by mid-2026. InvestingPro subscribers can access 8 additional key insights and a comprehensive Pro Research Report that provides deep analysis of RWE’s financial health and growth prospects.

Berenberg forecasts a 13.7% compound annual growth rate (CAGR) in earnings per share and a 7.5% CAGR in dividends per share for RWE between 2025 and 2030. The firm noted that if future project returns come into question, RWE has flexibility to buy back more shares to reach its growth targets.

The research firm believes this growth potential is not currently reflected in RWE’s valuation. Berenberg also highlighted upcoming opportunities for RWE to strengthen confidence in its growth trajectory through renewables and flexible generation auctions, as well as potential future power price volatility.

Berenberg maintained RWE as a top three sector pick, with a EUR42 per share price target for the European listing alongside the $49 target for the American Depositary Receipt.

In other recent news, RWE AG has received an upgrade from Bernstein SocGen Group, which changed its stock rating from Market Perform to Outperform. The research firm also raised its price target for RWE AG from EUR39.00 to EUR41.00. This decision is based on what Bernstein SocGen describes as a "compelling set of near term catalysts" for the company. These catalysts include the upcoming UK renewable auction (AR7) and German gas power plant auctions. These developments are seen as significant opportunities for RWE AG in the near future. Investors might find these updates noteworthy as they reflect potential growth avenues for the company.

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