Buyers on Enel, Jefferies raises target price by 10 per cent

(Il Sole 24 Ore Radiocor)- Positive session for Enel, which is among the best performers in the FTSE MIB. Driving this is the fact that the analysts of Jefferies, reiterating their 'buy' rating, have raised their price target by 10 per cent, from EUR 8.6 to EUR 9.5 per share, against the current value of EUR 7.76.

"Although the stock has underperformed its competitors by around 7% since the start of the year, we see a potential turning point," Jefferies explains, pointing out that "clarity on the Italian concession could unlock the €3.5bn share buyback". In addition, in Latin America 'market confidence is improving, which could help multiples expand. With a P/E of 12 times on 2026 and a shareholder return of around 8%, we believe Enel well positioned for rerating, they add.

In particular, according to Jefferies, clarity on the extension of Enel's Italian DSO (Distribution System Operator) concession, which accounts for around 20% of the group's Ebitda, 'could significantly improve visibility on further capital allocation'. The electricity distribution concessions, which define the time period and conditions for operating the network, have been renewed and some will expire on 31 December 2030. "In our base case scenario, we use a fee of EUR 5 billion, with an addition of 100% to the Rab, supporting a Cagr of around 10% and aprojected Rab of EUR 28.7 billion by 2027. We estimate that for every additional billion euros added to the Rab, Enel's earnings per share could increase by around 0.5%," explains Jefferies, according to which, if this clarity materialises as expected in the coming months, "it could pave the way for Enel to initiate its €3.5bn share buyback programme (around 4.4% of market capitalisation), supported by a margin of around €10bn. In our scenario, we estimate that the buyback could also contribute to anapproximately 4% increase in 2026 earnings per share over consensus."