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On Wednesday, RBC Capital Markets adjusted its stance on National Grid (LON:NG) shares, moving from an Outperform to a Sector Perform rating, while slightly increasing the price target to GBP11.75 from GBP11.50. The revision reflects a tempered view of the stock’s potential growth, acknowledging the company’s solid investment proposition but recognizing limited upside at its present valuation. According to InvestingPro data, the stock is trading near its 52-week high of $74.82, having delivered an impressive year-to-date return of 25.72%.
Analyst commentary from RBC Capital highlighted that although National Grid presents a strong investment case, the current share price leaves little room for further appreciation. This assessment aligns with InvestingPro’s Fair Value analysis, which suggests the stock is slightly overvalued at current levels. The lack of immediate catalysts for the stock was also noted, with the upcoming RIIO-T3 draft determination introducing some regulatory uncertainty that could impact the stock until the final determination in December. Despite these concerns, InvestingPro data shows the company maintains a GOOD financial health score of 2.62, with liquid assets exceeding short-term obligations.
The price target adjustment to 1,175p per share comes after the firm updated its expectations based on National Grid’s fiscal year 2025 results. This represents a modest increase from the previous target, suggesting a belief in the company’s fundamental strength but also signaling caution due to potential regulatory headwinds.
National Grid, which is listed on both the London Stock Exchange (LON:LSEG) (NG:LN) and the New York Stock Exchange (NYSE: NGG), is a multinational electricity and gas utility company. It plays a critical role in the energy sector, particularly in the United Kingdom (TADAWUL:4280) and the northeastern United States.
The decision by RBC Capital to downgrade the stock rating to Sector Perform indicates a neutral outlook, implying that the stock is expected to perform in line with the average returns of the sector. Investors in National Grid will likely monitor upcoming regulatory developments and company performance closely, as these factors may influence the stock’s trajectory in the near term.
In other recent news, National Grid has seen mixed evaluations from analysts. UBS downgraded the company’s stock rating from Buy to Neutral, citing limited upside potential and adjusting the price target slightly to GBP11.50 from GBP11.60. UBS analysts believe that anticipated positive outcomes and increased US nominal Return on Equity are already reflected in the current stock price. Meanwhile, Bernstein analysts upgraded National Grid’s rating to Outperform, raising the price target to GBP11.20 from GBP10.40. Bernstein’s upgrade is based on the view that National Grid’s US operations are undervalued compared to its US peers and that both its US and UK segments have significant growth potential. The contrasting evaluations highlight differing perspectives on National Grid’s valuation and growth prospects. Investors will likely keep a close watch on these developments and any future announcements that may impact the company’s valuation.
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