Story
Iberdrola Upgraded to 'Buy' by Deutsche Bank on Stronger Earnings Outlook
Summary
Deutsche Bank raised its rating on the Spanish utility to 'buy' from 'hold' and increased its price target, citing stronger power prices and an anticipated boost to growth targets in the company's next strategic plan.
Deutsche Bank has upgraded Spanish utility Iberdrola (IBE) to “buy” from “hold,” citing a more robust earnings outlook driven by higher power prices. The bank also raised its price target for the company, anticipating positive updates to its long-term strategic plan.
Upgraded Forecasts
In a note published Tuesday, Deutsche Bank increased its price target on Iberdrola to €22 from a previous €18.50. This change reflects higher earnings forecasts and an improved near-term growth outlook for the utility.
The bank raised its earnings-per-share (EPS) estimates for the company, forecasting €1.14 for 2027 (up from €1.09) and €1.27 for 2028 (up from €1.17). The estimate for 2026 remains unchanged at €1.01, according to the report. The new price target implies an 8% upside from Iberdrola's closing price of €20.33 on September 25, with a potential total return of 13%.
Strategic Plan in Focus
Analysts are looking ahead to Iberdrola's new strategic plan, due in March 2027. Deutsche Bank expects the company may extend its current plan through 2030 and increase its annual adjusted net income growth target to 10% from the current 8%. Such a move could place adjusted net income at approximately €10 billion by 2030, which the bank notes is about 10% above the current Bloomberg consensus.
AdIn the shorter term, Deutsche Bank also anticipates that Iberdrola will raise its 2026 guidance during its third-quarter results announcement. The bank forecasts 12% adjusted net income growth for the year, compared to the company's current guidance of at least 8%.
Market Context and Valuation
Several factors support the bank's optimistic view, including:
- Persistently high power prices.
- Growing demand from data centers.
- Rising prices for U.S. power purchase agreements.
- Spain's planned capacity market for 2027.
Despite trading at a premium to the sector—about 16 times Deutsche Bank’s 2028 earnings estimate versus a sector average of 13 times—the bank noted that Iberdrola's valuation premium over its direct peers is at its lowest level in some time. Key risks to the outlook include adverse regulatory changes and a potential decline in power prices.
Read next
More on Stocks
Oura Delays Nasdaq IPO, Citing Unfavorable Market Conditions
The smart ring maker has postponed its initial public offering, blaming market uncertainty despite reporting strong user growth and profitability. The company has not provided a new timeline for its public debut.
Anthropic's IPO Filing Reveals $518 Billion AI Buildout Plan with Largely Non-Cancelable Contracts
A confidential IPO prospectus shows AI firm Anthropic has committed to spending at least $518 billion over the next decade on computing infrastructure, with approximately 80% of that sum locked into non-cancelable deals with tech giants like Google, Amazon, and Microsoft.
UPS Secures Exclusive Deal to Handle TikTok Shop's US Returns
United Parcel Service will exclusively manage no-box, no-label returns for TikTok Shop's U.S. sellers, a strategic move to capture more of the high-margin reverse logistics market amid intense competition.
Meta Expands Muse AI Agent to Small Businesses With Shopify, Stripe Integrations
Meta Platforms is rolling out its Muse AI agent to small businesses, integrating with key platforms like Shopify, QuickBooks, and Stripe in a move to diversify revenue beyond advertising.