Credit Suisse partially revises its outlook for 2022 with the analysis “What’s left after the storm”: if previously the experts of the investment bank believed that, even benefiting from the improvement in fundamentals, sector results would have been eroded by government interventions before they could materialize, ended Q1 analysts believe government interventions were “frequent but positive” and left utility profitability “largely unaltered “.
“In some cases,” reports the analysis, “Southern European companies have held back from taking advantage of unsustainable commodity and energy performance through their hedging policy. They have focused on the consumer and customers. more vulnerable, providing support through their net working capital. We believe that the evolution of regulation at European level is supportive for the sector, both in terms of the development of renewables and in terms of market design “. Experts point out that both REPowerEU and the European Union summit held between 24 and 25 March have tried to address the current energy crisis.
“Although the EU has allowed member states to introduce windfall taxes (taxes on unexpected profits, which often follow a phase of strong expansion in a sector, ed), we believe that their limited scope is unlikely to be disruptive for the sector. “, reads the report. “There is a greater risk for trading houses, fossil fuel companies. The initial exception granted to Iberian countries to introduce changes in the pricing mechanism shows that the EU is open to market design reforms, historically seen as a necessary step in the light of a changing landscape of energy production “.
REPowerEU adds 80 Gw, allocated for the production of hydrogen energy, to the growth targets of renewables (about 600 Gw) set for 2030 with the FitFor55 (package of proposals of the Commission for the green transition). According to Credit Suisse analysts, this will ensure that new renewable installations proceed at a faster rate, starting from the current one of around 30 Gw per year in the EU. “REPowerEU has set itself the target of accelerating the rate of deployment of renewables by 20%. Although capacity-building projects have already been identified, such acceleration needs the support of Member States through the reduction of bureaucracy. in turn leads to an increase in investor confidence in renewable targets,
Another dimension to consider is the dependence of European states on Russian gas, which in the medium term could be reduced thanks to renewable energies. However, it is likely that alternative import routes will be strengthened for gas: “We see a growing risk for gas infrastructures in Italy, where the existing interconnection in the Mediterranean has room to increase capacity,” analysts explain. “REPowerEU calls for any new investment in gas infrastructure to be also hydrogen-compatible, and in turn revises the targets for hydrogen by 2030, adding 15 meters to the previous 5.6. The growth of infrastructure projects related to hydrogen was evident in the last immersive sector events we participated in, with the first investments in
The investment bank then makes a list of the best companies to keep an eye on, considering the issue of renewables as a determining factor. The favorite remains the German Rwe (target price equal to 40.5 euros, rating outperform) which benefits from Germany’s attention to the development of renewables and a benevolent approach by the government towards the sector. On the Frankfurt Stock Exchange the stock is now positive, with a gain of 1.33% to 40.075 euros. The second company considered is Acciona Energia (target price of € 39.6, outperform rating), which has a negligible exposure to Iberian hydrogen. On the Madrid stock exchange, the stock jumped by 2.45% to € 35.10.
The latest company on the podium is Enel (target price of 8.3 euros, outperform rating) which could benefit from an acceleration of restructuring in Latin America, remaining the largest developer of renewables globally. In Piazza Affari, the stock is almost on par at € 6.105 (-0.08%). Finally, analysts cite the Danish Vestas in the list, which they assigned an outperform rating after 6 and a half years. The estimates on the annual flow of orders (increase of 6 Gw per year) and on earnings per share in 2026 (increase of 41%) have also been revised. The stock is rallying today on the Copenhagen stock exchange, marking a + 9.89% at 220.1 crowns per share, while the target price set by Credit Suisse is 250 crowns. (All rights reserved)
