Investing.com — Shares of Enagás (BME:ENAG) inched up on Tuesday following an upgrade from JPMorgan, which raised the stock's rating to “neutral” from “underweight”.
This revision comes as analysts believe that much of the uncertainty clouding the company's prospects is now adequately reflected in its valuation.
The brokerage’s end-2026 price target for Enagás has been set at €13.50, an increase from the prior €13, representing cautious optimism about the company's trajectory in the evolving energy landscape.
JPMorgan noted that the stock's 24% underperformance compared to the broader European utilities sector over the past year has resulted in a more balanced risk-reward dynamic.
Analysts cited the disposal of the Tallgrass stake at a favorable valuation as a significant positive development, bolstering the company's financial position.
They also mentioned the strong cash flows of Enagás's legacy gas business, which underpin its ability to maintain an attractive €1 per share dividend.
However, uncertainties surrounding the company's Peruvian assets remain a key factor limiting near-term upside potential.
The analysts further emphasized 2025 as a pivotal year for Enagás, particularly in its efforts to resolve outstanding issues related to the GSP arbitration in Peru and to clarify its ambitions in renewable gases like hydrogen.
While progress in green hydrogen and CO2 projects could enhance the company’s growth outlook, JPMorgan expressed caution regarding the timing and materialization of these investments.
Despite regulatory challenges and a backdrop of declining regulated revenues in its Spanish operations, JPMorgan's view is that Enagás is now better positioned financially and strategically.
The analysts pointed to upcoming regulatory determinations and strategic plans in 2025 as critical milestones that could shape the company's long-term role in the energy transition.
Enagás’s yield, projected at a solid 7.4% through the rest of the decade, remains a cornerstone of its equity appeal.
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