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On Wednesday, Jefferies analyst Zach Ho issued an upgrade for Engie SA (ENGI:FP) (OTC: ENGIY (OTC:ENGIY)) stock, changing its status from Hold to Buy. The firm also increased the price target for the energy company to €20.00, up from the previous €16.60. This revision reflects a more optimistic outlook on the company’s financial prospects. The stock, currently trading at $19.60, has shown impressive momentum with a 27% return over the past year and is trading near its 52-week high of $19.66, according to InvestingPro data.
The upgrade was prompted by Engie’s fiscal year 2024 update, which Ho found to be notably impressive. This led to a reevaluation of the earlier downgrade made in January. According to the analyst, Engie now presents a solid equity story characterized by clear earnings visibility and manageable issues that could affect the company’s performance. The company maintains a strong financial position with an "GREAT" Financial Health Score of 3.12 on InvestingPro, supported by a healthy current ratio of 1.09 and consistent dividend growth over the past five years.
Ho believes that Engie is positioned to achieve normal utility growth starting from 2026. This potential for growth is considered attractive enough to spark increased investor interest and possibly lead to the company’s valuation aligning closer with its industry peers.
The new price target of €20.00 suggests a total shareholder return of 20% and is based on a forecasted price-to-earnings ratio of 10 times for the fiscal year 2027. This valuation represents a roughly 20% discount when compared to similar companies in the sector, such as Endesa (BME:ELE) and Iberdrola (OTC:IBDRY), indicating a potential undervaluation of Engie’s stock at its current price.
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