Iberdrola, attractive growth and high visibility; Buy (T.P. 12,50 vs 11,90 euros/share)


Bankinter | Upward revision to targets in the Strategic Plan 2025. Attractive growth and strong visibility in results. Iberdrola has revised upward the objectives in its Strategic Plan 2025. It now expects EBITDA in 2025 of 16.5-17.0 billion euros vs 15 billion previously, and NAP of 5.2-5.4 billion euros vs 5 billion previously. Average annual growth rate in EBITDA and NA`P in the period 2022-2025 will be between 8% and 10% (vs 5% and 7% previously).

The growth drivers in the results will be the new renewables capacity and the increase in the base of regulated assets in networks. The visibility on achieving the objectives included in the Plan is very high.

In renewables, Iberdrola aims to increase capacity by 30% in the period. Of this new capacity, 50% is already under construction and the rest is assured by the existing portfolio of projects in a mature phase. In networks, the group’s objective is to grow the base of regulated assets (RAB) by 44% in the period. Of these investments, 85% are already included in the corresponding regulatory frameworks. The security of supply and the electrification of energy demand require substantial investments in networks.

After this update, we are upping our estimates, raising our Target Price to 12,50 euros/share (11,90 previously) and we maintain our Buy stance. It is very positive that in an environment like the current one with more moderate economic growth, high inflation and higher interest rates, Iberdrola has been capable of revising its targets upwards. The factors allowing for this improvement include: i) Structural growth in networks and renewables which remains “intact” in the face of the economic slowdown; ii) A large part of its businesses is protected against inflation; iii) focus on more profitable projects; iv) Environment of high energy prices and v) More favourable interest rates. Iberdrola forms part of our model portfolio of Spanish and European shares.

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