On Monday, Barclays (LON:BARC) adjusted its stance on Neoen SA (NEOEN:FP) (OTC: NOSPF) stock, shifting the rating from Overweight to Equalweight. The firm also increased the price target on Neoen's shares to EUR 39.85, up from the previous EUR 32.00. This change comes in light of the recent acquisition bid by Brookfield to purchase Neoen.
The analyst from Barclays stated that the rating downgrade reflects the limited upside potential for Neoen's shares as the market awaits the outcome of regulatory approval for the acquisition, which is anticipated in the fourth quarter of the year. The expectation of imminent changes in interest rates was also noted as a factor in the revised outlook.
According to Barclays, with the renewable energy sector becoming more attractive for investment, the firm suggests that investor capital might be better allocated to other companies in the industry, such as ERG. This recommendation is based on the current market conditions and the pending acquisition of Neoen by Brookfield.
The analyst further elaborated on the situation, indicating that the pending regulatory approval process is a key aspect to watch in the coming months. Until the acquisition is confirmed, the potential for significant stock price movement is seen as limited.
Barclays' updated price target of EUR 39.85 represents an upward revision, suggesting that Neoen's shares have some room to grow based on the firm's current assessment. Nonetheless, the new rating of Equalweight points to a more neutral perspective on the stock's near-term trajectory.
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