Arthur Sitbon (analyst) downgrades Redeia to Underweight (UW). He believes that the rise in bond yields pressures Redeia's value creation capacity through higher financing costs, which could justify a relative valuation compression.
He sees few chances of positive surprises in short-term EPS growth, as the expected visibility on the national transmission plan could be delayed, prolonging the uncertainty about EPS prospects beyond 2029.
Within the regulated universe, Arthur finds better opportunities in his Top Picks National Grid and Elia.
National Grid offers a near 7% EPS CAGR between 2026 and 2029 for an estimated P/E ratio of approximately 13x in 2026 (compared to Redeia, with ~0% and ~17x, respectively), in addition to a greater protection against inflation and rising bond yields thanks to the UK's regulatory framework for networks.
On the other hand, Elia offers a near 13% EPS CAGR between 2026 and 2029 for an estimated P/E ratio of ~17.5x in 2026, supported by a solid cost-plus regulatory framework and potential positive catalysts in the form of improved guidance and a favourable regulatory decision in Germany.
In Spain, he prefers Naturgy, which he considers better positioned in a high bond yield environment, thanks to the potential for upward revisions of profits, an attractive valuation, and the optionality for reinvestment.
