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On Monday, Bernstein analysts led by Deepa Venkateswaran elevated the rating of National Grid (LON:NG) shares, listed on both the London Stock Exchange (LON:LSEG) (NG:LN) and the New York Stock Exchange (NYSE: NGG), to Outperform. Accompanying this upgrade is a new price target set at GBP11.20, an increase from the previous GBP10.40.
The rationale behind the upgrade, as stated by the analysts, hinges on the comparison between National Grid and its US counterparts. Over the last year, US peers have experienced a re-rating, yet National Grid, with approximately half of its assets based in the US, has not enjoyed a similar revaluation and remains undervalued compared to European regulated network peers.
Bernstein’s analysis suggests that the US segment of National Grid’s business should not be trading at a discount, given its growth prospects, clear visibility, and returns. Furthermore, the UK portion of the business is also deemed attractive, boasting significant growth potential and a positive regulatory environment.
The new price target of 1,120 pence represents a 17% upside from the previous target, reflecting Bernstein’s confidence in National Grid’s valuation and performance potential. The analysts view the combination of the company’s US and UK operations as collectively deserving of a higher market valuation.
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