Enel: SG says excessively discounted; initiates with buy.

(CercleFinance.com) - Société Générale (SG) has initiated its coverage of the stock the Italian energy company Enel with a buy rating, which it says stands out due to both its yield and discount.


SG has set its associated 12-month target price at 5.60 euros, giving the stock upside potential of around 15%.

Analysts note that for the years 2017 and 2018, the consensus was based on Enel management's own forecasts. However, the expected dividend for FY 2019, i.e. 0.32 euro per share, corresponds to a yield of 6.7%, "i.e. a 27% discount on the sector". In terms of P/E, considering management's expectations, the Enel stock is also trading at an 18% discount relative to its peers.

In short, the market expresses doubts "probably related to the group's exposure to Italy and LatAm" regarding the outlook for 2019. SG considers that this is unjustified, as "70% of EBITDA growth in 2019 already secured". In addition, there could be pleasant surprises in LatAm.


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