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On Wednesday, Bernstein analysts maintained a positive stance on SSE Plc (LON:SSE:LN) (OTC: SSEZY), reiterating an Outperform rating alongside a price target of £23.00. With a market capitalization of $23.59 billion and trading at an attractive P/E ratio of 9.29, SSE has demonstrated robust and defensive earnings growth, driven by a substantial capital expenditure allocation to its Power Networks division. InvestingPro analysis shows the company is currently trading near its Fair Value, supported by strong fundamentals and consistent profitability. This segment, which is expected to account for approximately 46% of SSE’s adjusted EBIT from the fiscal year 2025 to 2025, provides a solid business foundation with significant catalysts anticipated in 2025.
Bernstein analysts pointed out that SSE is projected to grow its earnings per share (EPS) at a compound annual growth rate (CAGR) of 8% from the fiscal year 2025 to 2025. They attribute this to high-quality drivers, including the regulatory predictability of the Networks business. The analysts underscored that the regulatory framework affords SSE valuable protection against macroeconomic fluctuations.
In addition to the Power Networks’ promising outlook, Bernstein also finds SSE’s Renewables division to be an attractive aspect of the business. The Renewables division boasts a disciplined approach to capital allocation and a proven record of successfully completing major projects. This division is seen as another crucial growth engine for SSE, contributing to the overall positive forecast.
The analysts emphasized that SSE’s Renewables division does not have exposure to the US market, which is considered an advantage. This strategic positioning, combined with the company’s disciplined capital allocation and successful project execution track record, bolsters SSE’s growth potential.
In summary, Bernstein’s analysis suggests that SSE is well-positioned to deliver continued earnings growth over the next several years, supported by a strong regulatory environment and significant investments in both its Power Networks and Renewables divisions. The company has maintained dividend payments for 34 consecutive years, demonstrating its commitment to shareholder returns. The reiterated £23.00 price target reflects the firm’s confidence in SSE’s strategic direction and its ability to achieve its growth objectives. For deeper insights into SSE’s financial health and growth potential, InvestingPro subscribers can access additional tips and comprehensive analysis tools.
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