Street Calls of the Week
Investing.com -- European utility stocks have shown varying performance this year, with some clear standouts emerging in the sector. Barclays has identified its top picks among EU utilities, highlighting companies with strong fundamentals and growth potential despite regional challenges.
The investment bank’s analysis points to several utilities that offer compelling value propositions in the current market environment, with French and Italian companies featuring prominently in their recommendations.
Barclays reaffirmed its "overweight" rating on Veolia, naming it its preferred environmental services stock in Europe.
The company’s shares have underperformed the European utility sector by approximately 7% since August 25, despite limited exposure to France (less than 12% of estimated 2025 group EBITDA).
With a closing price of €29.23 on October 14 and a target price of €39, Veolia carries a potential upside of 33.4%.
The company’s strong position in global water and waste management, coupled with a busy investor engagement schedule through 2025, could help close the performance gap.
Engie also holds an "overweight" rating with a target price of €22 and a closing price of €19.11, representing an upside of 15.2%.
The French utility generates about 42% of its 2025 expected EBITDA from France but remains largely protected by its regulated gas network and household gas supply business.
Barclays noted that Engie continues to trade at a valuation discount compared with European peers, with an estimated medium-term price-to-earnings ratio of about 10x and a dividend yield of roughly 7-8%.
The company’s upcoming third-quarter and full-year 2025 results are viewed as key events for investors.
Barclays listed Enel among its top integrated utility picks in Europe. The Italian energy group, rated "overweight," remains central to the firm’s constructive industry view due to its diversified power generation portfolio and steady earnings upgrades across 2025.
Analysts said Enel’s large-scale renewable capacity and integrated operations position it to benefit from the structural drivers that continue to support European utilities.
Endesa (ELE.MC)
Spanish power utility Endesa also received an "overweight" rating, backed by solid fundamentals and stable regulatory conditions.
Barclays noted that Endesa’s inclusion among the top integrated utilities reflects its consistent performance within Spain’s electricity market and a supportive dividend profile, aligning with the sector’s improving 2025 earnings outlook.
U.K.-based SSE rounds out Barclays’ top five. The company’s exposure to renewable generation and transmission networks has made it a standout performer within the European integrated utilities group.
Barclays maintained its "overweight" stance, citing consistent earnings expansion and the company’s alignment with long-term clean energy transition goals.
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