On Thursday, CFRA maintained its Hold rating. National Network (LON:) (NYSE:NGG), but raised its price target from $60.00 to $70.00. The adjustment reflects a revised 12-month price target based on a forward price-to-earnings (P/E) ratio of 15.7x, which is in line with the company’s five-year forward P/E average.
Despite the target price increase, CFRA adjusted earnings per share (EPS) estimates for FY2024 to £3.50 from £3.75 and for FY2025 to £3.65 from £3.80.
National Grid recently published its Beyond 2030 report, which highlights the urgent need to improve the UK’s electricity network to meet growing demand for renewable energy. In response to this need, National Grid has announced a significant investment plan totaling £58 billion. The plan includes expanding the offshore electricity grid and building a new north-south electricity backbone, allowing electricity produced in Scotland to be transferred to the north of England.
In addition to the UK investment, National Grid intends to invest more than $4 billion to improve electrical infrastructure in upstate New York. These investments are seen as consistent with the view that electricity infrastructure is critical to achieving net-zero emissions.
National Grid’s business model, which is highly regulated and provides protection against price and volume risks, is expected to strengthen its defensive profile in the market.
CFRA’s continued Hold rating indicates a neutral stance on the stock, suggesting that while there are positive aspects to National Grid’s investment strategy and business model, investors may wish to remain cautious.
The firm’s analysis indicates that the company’s initiatives align well with broader environmental goals and potentially provide stability in a market increasingly focused on sustainable and sustainable infrastructure development.
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