Investing.com — Goldman Sachs upgraded Spanish utility Iberdrola to “buy” from “neutral” and raised its price target to €25 from €21, citing stronger earnings growth and dividends as potential drivers of shareholder returns.
The new target implies 21.3% upside from Iberdrola’s Sept. 30 close of €20.61, Goldman said in a note dated Thursday.
Goldman expects Iberdrola’s earnings to grow at a compound annual rate of about 10% between 2026 and 2031, while continued upward revisions to market profit estimates could provide further support for the shares.
The broker expects Iberdrola to set out an extended investment plan through 2030 or 2031 at its April 2027 capital markets day.
It forecasts capital spending of about €100 billion over 2026-31, up from its previous estimate of €85 billion, with most of the increase focused on power grids and repowering wind farms in the United States.
Around 70% of the planned spending would go toward regulated power networks, mainly in the U.S. and Britain.
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Goldman expects the investment programme and dividend payments to keep Iberdrola’s cash flow negative through 2031, while net debt relative to earnings could rise to about 4 times by the end of the plan.
Goldman forecasts net profit of €10.2 billion in 2030 and €10.9 billion in 2031. It raised its 2029-31 earnings-per-share forecasts by about 20%, helping underpin its higher valuation for the stock.
Deutsche Bank also upgraded Iberdrola to “buy” from “hold” on Sept. 29, raising its price target to €22 from €18.50.
It cited stronger earnings expectations, higher power prices and potential upside from the company’s next strategic plan update, expected in 2027.
Deutsche Bank expects Iberdrola to extend its existing 2025-28 plan through 2030 and potentially raise its annual adjusted net income growth target to 10% from 8%.
That would put adjusted net income at around €10 billion by 2030, roughly 10% above Bloomberg consensus, it said.
Goldman said its valuation implies Iberdrola remains at a double-digit premium to peers on both enterprise value to earnings and price-to-earnings measures for 2026-30.
It also flagged risks from weaker power prices, regulatory changes in Spain and Britain and lower returns allowed on regulated networks.
About 45% of Iberdrola’s earnings come from its networks business, while roughly two-thirds of EBITDA is generated outside Spain and the European Union.
