Since the end of 2023, Redeia has seen the value of its shares increase on the stock market by 17%. This increase is consistent with the gradual improvement of their recommendations by analysts. Renta 4 is the latest entity to have changed its advice, this week it changed the sign that suspended to the electricity company, ranging from advice on the sale of shares to their maintenance. With this improvement, Redeia already convinces almost all the banking entities that follow its evolution on the stock market that now is not the time to sell. Despite the stock market’s cumulative rise, analysts expect the company to continue growing in 2025.the year in which the change in electricity regulations in Spain should occur.
In 2023, Redeia announced an increase in investments in our country, and in the middle of this year it announced that it would continue to make these disbursements over the next two years, with the aim of reaching the levels of highest investments in its entire history, which, together with the updating of regulations, will lead to an increase in the regulated income you receive.
This was the main motivation for the change made by Renta 4. “The strong expansion of the planned electricity transmission networks should imply more favorable regulation than the current one, since we consider that the financial remuneration rate (FRR) is currently not value generating“, says the expert of the entity Ángel Pérez, emphasizing that they expect the TRF of the networks to increase to 6.55% (compared to 5.58% currently). “We estimate that this level of remuneration would allow us to return to the path of value creation for new investments. We consider that this level is the one that the market would discount, therefore a TRF official above these levels it would likely act as a catalyst for the price,” they add.
Furthermore, in the latest report on the evolution of the company, Pérez also indicates that the entity has increased the target price of a company title by 15%, up to 19 euroswhich means a trajectory of 10.3% for the coming months. Pérez says that one of the reasons for this change is “the slight downward adjustment of the wacc (average cost of capital) of the electricity transmission activity in Spain”. Furthermore, “after a lower performance than the Ibex over the last 12 months, we have decided to improve the recommendation, supported by a potential of 10.7% and an expected dividend yield for 2025 of 4.7% “, he adds.
Market recommendation
The company is gradually gaining followers among analysts. According to the market consensus which reflects Bloomberg, The vast majority of analyst houses that follow the company recommend holding or buying shares. The company has not received this level of support since 2014.
Among the analysis houses that see a greater trajectory for Redeia in the coming months, Mirabaud stands out, with the highest valuation, of 21.2 euros for a company titlewhich represents a potential of 22%; The firm reiterated this price target at the end of July, and maintains this figure from 2022. Barclays, Bernstein, Mediobanca and RBC Capital also give it one of the highest potentials, since they estimate that Redeia will increase by 16.5%, up to 20.5 euros per share. Anyway,
now alone two of the analysis houses united in this consensus maintain their advice to get rid of the company’s securities. From this group, the last analytical house that examined the recommendation of the Spanish electricity company was Oddo BHF, in which it once again reiterated its opinion that it is better to sell securities of this company.
