LIVE MARKETS-UBS sees 10-20% upside for European renewables

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UBS SEES 10-20% UPSIDE FOR EUROPEAN RENEWABLES

A basket of European renewable stocks is up 10% year-to-date, and UBS expects the party continue, with the team there seeing upside potential of 10-20%.

They say two powerful and durable forces are colouring the landscape for these companies.

"...accelerating electricity demand from global datacentre expansion and the continued reinforcement of European decarbonisation policy," says UBS.

The global AI data centre build-out might concentrated in the U.S., but European equipment suppliers are seeing "increasingly material" impact from this theme.

And UBS explains that the industry is shifting towards more long-dated corporate PPAs with near-24/7 delivery on the back of the build-out.

These trends are "improving cashflow visibility, elevating the strategic value of grid connections, and accelerating co-location opportunities for hybrid renewables-plus-storage assets."

So what are their top picks?

Among their list of buy-rated stocks are Iberdrola IBE.MC, Siemens Energy ENR1n.DE, RWE RWEG.DE and EDP EDP.LS.

UBS says generally earnings revisions have stabilised and, in several cases, turned positive, but dispersion remains.

"Companies with renewable solar, network exposure or diversified portfolios offer clearer visibility than pure-play offshore wind developers or wind OEMs reliant on lower cost cycles," says UBS.

(Lucy Raitano)

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