On Monday, Citi analysts increased the price target for Engie SA (ENGI:FP) (OTC: ENGIY (OTC:ENGIY)) to EUR19.00, up from the previous target of EUR16.80, while maintaining a Buy rating on the stock. This adjustment reflects a positive outlook on the company’s financial performance and future prospects. According to InvestingPro data, Engie trades at an attractive P/E ratio of 10.9x and shows a remarkably low PEG ratio of 0.12, suggesting potential value relative to its growth prospects.
Engie SA has demonstrated robust growth, with InvestingPro data showing an impressive YTD return of 30.71% and a one-year return of 33.04%. Citi’s analysis points to Engie’s well-balanced portfolio, which has limited exposure to cyclical market shifts. The business-to-business (B2B) segment contributes just 11% of the company’s EBITDA of $14 billion, suggesting a stable revenue stream. With a market capitalization of nearly $50 billion, Engie maintains its position as a prominent player in the Multi-Utilities industry.
The company is expected to continue delivering attractive returns, with projections of a double-digit return on capital employed (ROCE) across its portfolio. Citi forecasts an average ROCE of approximately 11% for the years 2025 to 2027. Additionally, Engie’s earnings profile is anticipated to grow post the normalization of earnings related to its GEMS project, with an expected compound annual growth rate (CAGR) of about 5% for earnings per share (EPS) from 2026 to 2030.
Citi’s valuation of Engie also takes into account an attractive dividend yield, which is expected to be sustainably around 8% on average during the 2026-2030 period. The raised price target to EUR19.00 is based on these higher earnings expectations, and the firm’s Buy rating has been retained as a result of this positive assessment.
In other recent news, Engie SA has received an upgrade from Jefferies, with analyst Zach Ho changing the stock rating from Hold to Buy. The firm also raised its price target for the company to €20.00, up from the previous €16.60. This adjustment comes after Engie’s fiscal year 2024 update, which Ho found notably impressive, prompting a reevaluation of an earlier downgrade. The analyst highlighted Engie’s solid equity story, characterized by clear earnings visibility and manageable issues. Ho also noted that Engie is poised for normal utility growth starting from 2026, which could attract more investor interest. The new price target suggests a total shareholder return of 20% and is based on a forecasted price-to-earnings ratio of 10 times for fiscal year 2027. This valuation reflects a roughly 20% discount compared to similar companies like Endesa (BME:ELE) and Iberdrola (OTC:IBDRY), indicating a potential undervaluation of Engie’s stock.
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