A2A leads the utilities race. Market bets on higher guidance

(Il Sole 24 Ore Radiocor) A tonic session for utilities at Piazza Affari during the G7 Environment, Energy and Climate Summit in Turin. In particular, A2a led the rises in the Ftse Mib , in the wake of a report by Kepler Cheuvreux that points to an increase in the energy group's 2024 guidance thanks to heavy snowfall in winter (and early spring). which boosted hydroelectric production.

Also up well were Erg, Hera and Enel, which also benefited from Goldman Sachs' slight increase in target price. Also pushing the sector, also at the European level (sub-index +0.92%), are the confirmations by the countries participating in the summit of their commitments on decarbonisation and the development of clean energy, combined with reassurances from companies on the sector's resilience.

Looking in detail at Italy, the Minister for the Environment and Energy Security, Gilberto Pichetto Fratin, reiterated that renewables remain central to the country's development targets. However, the government also intends to focus on nuclear power, which will be included 'in the Pniec (National Energy and Climate Plan), to be transmitted to the European Commission by June 2024'. For Equita's analysts, there are no surprises: 'these are well-known contents, repeatedly taken up by the minister in recent months'. Even if 'the recovery of nuclear power is potentially negative for the long-term development of the renewables segment', the utilities sector does not seem unprepared to face a development scenario for this technology, which in any case appears 'long-term and to be verified from a legislative point of view'.

Returning to A2A, Kepler's experts point out that the company controlled by the municipalities of Milan and Brescia will release its first-quarter accounts on 14 May and hopefully it could already raise its estimates for 2024 on that occasion in light of the heavy snowfall in March and April, with performance already above expectations from January to March for the entire sector (A2A is the second national hydroelectric producer behind Enel). In particular, according to Kepler, the jump in hydropower and higher electricity prices should more than offset the lower output of combined cycles and the closure of coal. Put in numbers, the broker - which has an estimate of €2.062bn for A2A's 2024 Ebitda - expects the company's guidance, currently between €2bn and €2.02bn, to improve. Kepler has a target price for A2A of €1.9, with a 'Hold' rating.