RBC maintains Outperform rating on Engie with raised price target
RBC has reiterated its Outperform recommendation, raising its price target from 25 to 30 euros per share. "We are updating our estimates following the 2025 fiscal year results and Engie's £10.5 billion acquisition of UK Power Networks (UKPN). We view this transaction as a successful milestone in the execution of the group's strategy," the Canadian bank explained to justify its decision.
"This acquisition fulfills the long-awaited strategic objective of strengthening exposure to power grids; consequently, the share of capital employed in the networks division will be split equally between electricity and gas by fiscal year 2028. Although the transaction is approximately three times larger than anticipated, it reduces market price risk exposure to 15% of EBIT by FY2028 (down from 25% previously). It also dilutes exposure to gas networks and the French market, two sectors which, in our view, contributed to the stock's historical discount compared to its peers," the bank continued.
RBC further noted that attention is now focused on the RIIO-ED3* regulatory framework. The analyst anticipates an upward revision of budget allowances (totex), a lever expected to support accelerated growth of the regulated asset value (RAV) over the medium term.
*RIIO-ED3 is the next economic regulation framework that will apply to companies managing electricity distribution networks (DNOs) in the United Kingdom.
RIIO stands for Revenue = Incentives + Innovation + Outputs. It is the method used by Ofgem (the British energy regulator) to set how much network operators can charge consumers, while incentivizing them to invest.
ED stands for Electricity Distribution (the low-voltage lines that reach homes and businesses).
3 denotes the third period (or cycle) under this regime.
ENGIE is a major player in the energy transition, whose purpose is to accelerate the transition towards a carbon-neutral economy. With more than 90,000 employees in 30 countries, the Group covers the entire energy value chain, from production to infrastructures and sales. ENGIE combines complementary activities: renewable electricity and green gas production, flexibility assets (notably batteries), gas and electricity transmission and distribution networks, local energy infrastructures (heating and cooling networks) and the supply of energy to individuals, local authorities and businesses.
Every year, ENGIE invests on average EUR 12 billion to drive forward the energy transition and achieve its net-zero carbon goal by 2045.
The turnover achieved in 2025 amounts to EUR 71.9 billion. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, Euronext 100, FTSE Euro 100, MSCI Europe) and non-financial indices (DJSI World, Euronext Sustainable - Europe 120 / France 20, CAC 40 ESG, MSCI EMU ESG screened, MSCI EUROPE ESG Universal Select and Stoxx Europe 600 ESG-X).
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