Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Investing.com -- Citi Research downgraded shares of National Grid (LON:NG)to “neutral” from “buy,” citing limited valuation upside following a more than 10% rise in the stock over the past three months.
The brokerage said the shares now fairly reflect National Grid’s growth prospects and policy support, with the current valuation leaving little room for further gains.
Citi analysts said the stock is trading at a roughly 45% premium on a rolling spot regulated asset base basis and 35% premium to March 2026 RAB, assuming an 18.8x price-to-earnings multiple for its U.S. regulated business. The premium, they noted, is near the top end of recent trading levels.
Citi maintained a relative preference for companies offering regulated growth, such as National Grid , particularly in the current macroeconomic environment.
But the analysts warned that FX volatility, especially in GBP/USD, could be a headwind moving forward.
They also flagged the upcoming regulatory determination expected in late June as a key event that could influence investor sentiment.
Citi cut its 12-month target price to 1,050 pence from 1,063 pence, saying the current share price has already priced in the company’s updated earnings outlook and macro factors.
The analysts also addressed a surprise leadership change at the utility. National Grid announced that Zoe Yujnovich will take over as CEO in November 2025, replacing John Pettigrew.
Yujnovich, who previously held executive roles at Shell and Rio Tinto (NYSE:RIO), has limited experience in regulated network businesses.
While the market was surprised by the decision, Citi said some investors view the appointment as an opportunity to reassess National Grid’s transatlantic asset portfolio with a fresh perspective.
Following the company’s recent trading update, Citi made minor changes to its financial forecasts. Earnings per share for fiscal 2024/25 were revised slightly upward to 72.9 pence from 72.5 pence.
However, projections for 2025/26 and 2026/27 were lowered by about 5% to 8%, largely due to a weaker U.S. dollar and updated assumptions based on the latest regulatory framework and asset sales.
The analysts also introduced initial forecasts for fiscal years 2027/28 and 2028/29, and said the company’s new valuation supports their revised target price.