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On Thursday, CFRA analyst Lee Zhao Jun upgraded Endesa , S.A. (BME:ELE:SM) (OTC: ELEZY) stock rating from Hold to Buy and increased the price target from EUR27.00 to EUR32.00. The upgrade was influenced by Endesa’s improved profit outlook and enhanced shareholder remuneration. Zhao Jun adjusted the 2025 and 2026 earnings per share (EPS) estimates to EUR1.90 and EUR2.00, up from EUR1.80 and EUR1.90, respectively. The company, currently valued at $30.34 billion, trades at a P/E ratio of 14.28x, according to InvestingPro data.
Endesa’s financial results for the first quarter of 2025 showed a significant increase in net income and net ordinary income, both rocketing by 99.7% year-over-year to EUR583 million. This substantial growth was attributed to the absence of the temporary energy tax expense that had affected the first quarter of 2024, amounting to EUR202 million. InvestingPro data reveals impressive returns, with the stock gaining over 70% in the past year and maintaining a "GREAT" Financial Health Score of 3.1.
The company has committed to maintaining a 70% payout ratio from 2025 to 2027, with a minimum dividend of EUR1 per share. Endesa has also expressed confidence in its ability to sustain investment in the energy transition, supported by a favorable policy environment.
Zhao Jun believes that Endesa’s strong margin performance is capable of outweighing potential uncertainties, such as the reversal of peak Spanish long-term electricity demand. The analyst’s outlook suggests that there is additional valuation upside for Endesa’s stock, prompting the upgrade to a Buy rating.
In other recent news, Endesa, S.A. has been the subject of differing analyses from major financial firms. Citi analysts downgraded Endesa’s stock from Neutral to Sell, maintaining a price target of €20.30. They expressed concerns over the sustainability of the stock’s recent upward trend, citing potential risks from a global recession that may not be fully accounted for in its current valuation. Conversely, JPMorgan has taken a more optimistic view, raising Endesa’s price target to €27.50 and maintaining an Overweight rating. This adjustment is based on expectations of strong earnings momentum, with an estimated 6.5% growth in Ordinary Net Income for fiscal year 2025, surpassing Bloomberg’s consensus by 7.5%. JPMorgan also anticipates a favorable shift in shareholder remuneration policies, including a €2 billion buyback and increased dividends. The firm projects that Endesa will return approximately 28% of its market capitalization to shareholders through dividends and buybacks from 2025 to 2027. These contrasting analyses highlight the varied perspectives on Endesa’s future performance amidst evolving market conditions.
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