Both Endesa and Iberdrola are in luck. And Jefferies chooses them as two of the three ‘top picks’ of its preferred stocks along with the Scottish SSE, as European integrated utilities with high exposure to networks.
Considers that they are the best public service companies in the sector at this time to invest in, like a bet, notes Jefferies»relatively defensive in a volatile macroeconomic and commodity environment.
And furthermore endorses its commitment to Iberdrola against Endesa. In the case of Iberdrola, raises its recommendation from hold to buy and its target price rises from the previous 12.80 euros up to the current 15 euros per sharewhich means giving the company chaired by Ignacio Galán a potential improvement of 13.5% since its closing yesterday.
Highlights Jefferies»good visibility of underlying growth drivers in a company with a network-focused capital allocation and credible optionality as it bets on data centers in Europe»
Already in the case of Endesa, raises its target price to 22.50 euros from the previous 21with a potential improvement of up to 6.7% from its last price yesterday.
For the rest of the sector, upgrades SSE rating from «hold» to «buy» noting that the company offers attractive growth in UK networks and risk-free renewables exposure, with no exposure to the sector in the US.
Furthermore, Jefferies reiterates «buy» recommendation for Enel based on attractive risk/reward and high profit visibility
Y downgrades France’s Engie from «buy» to «hold» due to lack of convincing catalysts that help compensate for the influence of French politics and the weakness of Engie Brazil.