Morgan Stanley | Our analyst Arthur Sitbon changes Redeia’s recommendation to OW, seeing the shares poised for a rebound after discounting regulatory and blackout risks. He notes that its underperformance has been partly due to negative EPS revisions following a disappointing regulatory proposal, which now sets a floor for expectations, although he does not expect major changes in his base case scenario. He identifies an earnings inflection point in 2025, with one of the best EPS growth profiles in the sector (~7% CAGR EPS 24-30e compared to ~6% average in electric utilities) and a solid TSR (~13% 25-30e compared to ~10% in electric peers). Ahead of the next Capital Markets Day, possibly in Q4 2025 or Q1 2026, he expects the market to focus on Redeia’s solid growth story and revalue the shares. It becomes one of his favourite stories in networks alongside Top Picks SSE, Elia and Italgas, also showing a preference over Spanish peers Enagás and Endesa.
Redeia: poised for upside after EPS downgrades due to disappointing regulatory proposal; recommendation raised to Overweight
