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Bernstein reduces EDP to 'market-perform' on lower power prices

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** Bernstein downgrades Portuguese EDP EDP.LS to "market-perform" from "outperform" as it sees negative earnings momentum driven by lower power prices

** The broker expects power prices to stabilise, with likely some downward pressure this year, and supply margins to decline from the 2022/2023 highs due to competition from independent suppliers and the cap that the regulated tariff represents

** The companies are relatively "well hedged" for 2024/25 (with EDP to a lesser extent) with locked-in prices well above the current market prices, it points out

** However, the main impact from power prices is likely to come in 2026, with EDP as the most exposed, followed by Endesa ELE.MC and with Iberdrola IBE.MC the least exposed, the brokerage adds

** Bernstein stays "outperform" on Endesa due to the attractive multiples the Spanish company is trading at and solid earnings growth

** It remains "market-perform" on Iberdrola as although the firm is "ticking all the right boxes", the upside is limited in its view

Reporting by Matteo Allievi


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