(Finance) – Equity he lowered to 27 euros per share (-6%) the target price on ERGa company listed on Euronext Milan and active in the production of electricity from renewable sources, confirming the recommendation “Hold” on the stock, after the negative indications from the quarterly report (results in line with expectations but with reduced guidance for FY24 due to poor wind conditions at the start of the fourth quarter).
Analysts point out that EBITDA growth is completely absorbed byincreasing trend of D&A (for around 27 million euros) and come on higher financial costs (for approximately 7 million euros). The trend of investments/M&A (for 500 million euros) and the effects of the buyback completed at the beginning of the year for -37 million euros weigh on the growing debt.
“ERG’s valuation is now much more consistent with the normalized growth profile (at 12x PE and 8.3x EV/EBITDA in 2026 with a yield of 6.5%) – we read in the research – However, the momentum remains unfavorable with regulatory uncertainties in Italy, Germany and the US making the outlook in terms of capacity growth less visible. The approval of the buyback which increases the implicit DPS in line with the plan indications (greater shareholder remuneration in case of fewer development options) is good.”