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On Monday, Citi analyst Jenny Ping increased the price target for Acciona SA (ANA:SM) (OTC: ACIXF), a company operating in the renewable energy sector, to €118.00 from €116.00. Citi has chosen to maintain a Neutral rating on the stock.
Ping’s commentary pointed out the ongoing challenges in the renewables sector that have been affecting Acciona’s share price. Despite anticipating a robust second half of the year in divisions other than Energy, including Nordex (ETR:NDXG), Infrastructure, and Other, the valuation of Acciona’s subsidiary ANE continues to be a concern.
The analyst highlighted that investor discussions are focused on the potential benefits of ANE being listed as an independent entity and the possible steps Acciona might take regarding its approximately 12% stake in ANE that it does not already own. Ping noted that acquiring the remaining stake in ANE would cost Acciona nearly €700 million, a sum that the company cannot afford without jeopardizing its balance sheet ratios and credit ratings.
The report also mentioned that until ANE carries out further disposals to reduce Acciona’s leverage, or unless Acciona sells another asset at the parent level, there seems to be limited potential for a re-rating of its shares. Ping reiterated the Neutral stance on Acciona’s stock, indicating a wait-and-see approach until the financial strategies surrounding ANE are clarified and Acciona’s leverage is addressed.
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