RBC cuts Enel, Endesa to 'underperform' on overvaluation, regulatory fears

Endesa SA

19/11/2025 09:25

** RBC downgrades Italy's Enel ENEI.MI and its Spanish unit Endesa ELE.MC to "underperform" from "sector perform" over regulatory uncertainties in Italy and Brazil and valuation concerns

** It says Italy's proposed 10-year extension of electricity distribution concessions to limit costs passed on to consumers is more likely than the previously expected 20-year extension

** Enel's asset value increase may be 1 billion euros ($1.2 billion) below market expectations because of this, RBC says

** "Enel faces challenges in São Paulo over blackouts and poor performance, complicating the renewal of its key concession which is critical as Brazil contributes around 6% of its EBITDA," it adds

** It notes Enel's discount against the sector is around 10%, clearly lower than the usual 30%

** Endesa is also overvalued compared to peers, RBC adds, expecting its long-term electricity and gas margins to decline from current record levels

** It raises Enel's PT by 2.5% to 8 euros, while cutting Endesa's by almost 4% to 26.5 euros

** Eight out of 23 analysts rate Endesa as "sell", while only one out of 26 has negative rating on Enel - LSEG data

** Both stocks fall around 2% in early trading

($1 = 0.8639 euros)

(Reporting by Mirko Miorelli)

((Mirko.miorelli@thomsonreuters.com))