Elia Shares Climb as UBS Upgrades Stock, Citing Unjustified Sell-Off

Shares in Belgian electricity transmission operator Elia Group gained on Wednesday after analysts at UBS upgraded the stock, arguing that a recent sell-off following its first-half results was unjustified and that the company's long-term growth prospects remain intact.

Analyst Upgrade Drives Rebound

UBS raised its rating on Elia to 'Buy' from 'Neutral' and increased its price target to €147 from a previous €142. The bank's note highlighted that Elia's shares had fallen 8% since its July 29 earnings report, underperforming the European utilities sector by more than 700 basis points.

According to UBS, the market's negative reaction was triggered by a first-half earnings miss, a €0.3 billion (4%) reduction in planned 2026 capital expenditure, and unchanged group net income guidance. However, the bank believes this investor response was unwarranted.

Long-Term Growth Thesis Unchanged

In its analysis, UBS asserted that the reduction in capital spending was a matter of timing rather than a fundamental deterioration of the investment program. The bank also described management's 2026 guidance as conservative.

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UBS continues to forecast that Elia will deliver approximately €32 billion of capital expenditure over the 2024-2028 period. This investment is expected to support a 12% compound annual growth rate (CAGR) in earnings per share between 2025 and 2030, a pace that UBS notes is about twice that of industry peers.

Valuation Seen as Attractive

Reflecting a more optimistic outlook, UBS raised its 2026-2029 earnings-per-share estimates for Elia by 2% to 3%. The adjustment was attributed to higher expected earnings from Elia’s non-regulated business and the Nemo Link interconnector.

The bank also pointed to the company's valuation, noting that Elia trades at a 33% premium to its spot regulated asset base, below its long-term average of 36%. UBS called this an "attractive entry point" for investors. The new €147 price target implies a potential upside of 17% from the stock's closing price on August 3.