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On Friday, HSBC analyst Adam Dickens upgraded EDP - Energias de Portugal SA (EDP:GR) stock from Hold to Buy, with a new price target set at EUR4.10, increased from the former EUR3.60. Dickens anticipates that the company’s upcoming strategy presentation in November 2025 will reveal the company’s robust integration and solid financial health, which could potentially lead to a revaluation of the stock.
Dickens highlighted that EDP’s management is expected to showcase the strength of the company’s integration, resilient income compounding, a solid balance sheet, and an attractive dividend yield. The company’s wind and solar division, EDPR, may present more conservative capacity addition views at the November 2025 Capital Markets Day (CMD), but Dickens sees revaluation potential in other areas of the business.
The upgrade is driven by several factors, including the potential valuation upside in EDP’s hydro and retail businesses, which could benefit from structurally higher capture prices due to increasing intraday volatility. Additionally, Dickens expects strong earnings in 2025, bolstered by excellent hydro resources, and suggests that EDP’s dividend yield is appealing, particularly in the context of potentially falling interest rates.
The analyst also pointed out that with EDP’s reduced investments in renewables, there could be an increase in shareholder returns. A focus on efficiency is anticipated to support earnings per share (EPS) growth. This comprehensive analysis led to the decision to upgrade the stock rating to Buy from the previous Hold status.
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