Acciona Underweight: valuation is very tight, trading with multiples and elevated IRR

AccionaAcciona hands over largest railway tunnel in the Nordic Countries to Norway

Santander Corporate & Investment | We have revised our valuation and forecasts for Acciona (ANA) (Underweight, TP 96.00) due to:

(1) the increase in the useful life of renewable assets from 35 to 50 years;

(2) a cut of 100 bp in the average WACC of its assets to 6.3%;

(3) The installation of 2,850 MW of new assets by 2025;

(4) the valuation at market prices of Nordex up to 14.27 euros/share, which adds 2.94 euros/share to our new Objective Price.

We maintain the recommendation of Underweight: (a) the valuation of Acciona is very tight; it is trading above our objective Price, with mutiples and elevated IRR, in our opinión, for its risk profile and growth; (b) the toughening of competition complicates the creation of value in its main business (terrestial wind energy is becoming a capital cost business, and long term forecasts for electricity prices are not encouraging either).

 

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.