Morgan Stanley analyst Robert Pulleyn downgraded the rating on Iberdrola (0HIT – Research Report) to a Hold today, setting a price target of €14.50.
Robert Pulleyn has given his Hold rating due to a combination of factors that suggest limited near-term upside for Iberdrola’s stock. Despite Iberdrola’s strong performance and its position as a core holding amidst uncertain macroeconomic conditions, the stock price is near all-time highs and has significantly outperformed the European Utilities sector over the past year. This impressive performance, partly driven by the IBEX rally, indicates that the stock may be running out of room for further gains in the short term.
Additionally, Pulleyn has adjusted the price target from €15 to €14.5, reflecting higher bond yields and lower power prices, which offset increased network capital expenditures. Although Iberdrola’s earnings mix justifies a valuation premium compared to peers, the current premium valuation appears high relative to the broader Utilities sector. As a result, Pulleyn sees better risk-reward opportunities elsewhere in the sector, leading to the Hold rating.
According to TipRanks, Pulleyn is a 2-star analyst with an average return of 0.5% and a 50.36% success rate.
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