On Thursday, CFRA raised the price target for E.ON SE (ETR:EONGn) (EOAN:GR) (OTC: EONGY (OTC:EONGY)) to EUR14 from EUR13, while keeping a Buy rating on the stock.
The adjustment comes after E.ON reported a 16% year-over-year increase in its 2023 EBITDA, reaching EUR9.3 billion, surpassing the consensus estimate of EUR9.0 billion. This growth was attributed to the expansion of the Regulated Asset Base (RAB) in energy networks and the normalization of retail margins in Customer Solutions.
The financial firm's revised 12-month target price for E.ON is based on an expected 2024 EV/EBITDA multiple of 9.1x, which is above the company's 5-year average forward EV/EBITDA of 7.6x. This higher valuation is justified by E.ON's improved earnings growth prospects. CFRA also increased its 2024 EPS forecasts to EUR1.07 from EUR0.98 and introduced a 2025 EPS estimate of EUR1.10.
E.ON has announced an upgrade to its 5-year European investment plan, raising the total from EUR33 billion to EUR42 billion. This expansion is expected to support a compound annual growth rate (CAGR) of 10% in the company's RAB, seen as a positive move in light of the extensive network requirements for renewable expansion plans. The company has also projected a healthy 7% EBITDA CAGR from 2023 to 2028 and anticipates up to a 5% growth in dividends per share (DPS), which is considered sustainable due to the predictable earnings from its regulated assets.
The company anticipates normalized earnings for 2024 to be between EUR8.8 billion and EUR9.0 billion.
InvestingPro Insights
As E.ON SE (EOAN:GR) (OTC: EONGY) navigates through a period of strategic expansion and increased investment, insights from InvestingPro provide a clearer picture of the company's financial health and market position. E.ON's commitment to dividend growth is evidenced by its track record of raising dividends for 7 consecutive years, with a current dividend yield of 2.96%. This dedication to shareholder returns is further solidified by the company's impressive history of maintaining dividend payments for 33 consecutive years, showcasing its financial discipline and investor-friendly approach.
The company's market capitalization stands at a robust 37.13 billion USD, reflecting its status as a prominent player in the Multi-Utilities industry. Despite a challenging environment, E.ON's stock has been characterized by low price volatility, which may appeal to investors seeking stability in their portfolio. Moreover, the company's revenue for the last twelve months as of Q3 2023 is reported at 110.56 billion USD, although it has experienced a revenue decline of 6.42% during the same period.
While E.ON's P/E ratio is currently negative at -18.3, indicating that it was not profitable over the last twelve months, analysts predict the company will return to profitability this year. This forward-looking optimism may be a driving factor behind the recent price target upgrade by CFRA, alongside E.ON's promising investment plan and growth prospects. Investors interested in a deeper dive into the company's potential can access additional InvestingPro Tips at https://www.investing.com/pro/EONGY, and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With a total of 9 InvestingPro Tips available, investors can gain a comprehensive understanding of E.ON's market dynamics and financial metrics, which could be invaluable for making informed investment decisions.
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