Tuesday, November 28

Naturgy trades above its means

Naturgy It faces the last week of 2021 with a price per share above 28 euros, which means having a close of the year at hand with gains of up to 48 percent compared to its initial price of 19.07 euros. Experts, however, consider that this rise is temporary and warn of bearish forecasts for the company.

Naturgy’s incredible rise has brought the Spanish power company closer to all-time highs only seen for a short time in 2008.

The historical trajectory of a stock that at this time clearly above its average, however, leads the consensus of analysts not to trust that the Naturgy bullish rally has a path beyond the current conjunctural situation, causing it not to register not a single purchase recommendation among the 22 opinions issued about it.

And it is that Naturgy is experiencing a great moment of form in the stock market, boosted mainly by the pressure of an Australian investment fund, IFM Investors, which does not cease in its efforts to accumulate power within the Spanish company, and energy prices that have driven the results of the company.

IFM continues to gain ground at Naturgy

Since the takeover of Naturgy ended with an acquisition of 10.83 percent of the capital stock, IFM has been increasing its weight in the company to get closer to its initial minimum target of 17 percent, which it resigned to terminate the operation that marked the year of the Spanish listed company.

As of December 7, in accordance with the information provided to the National Securities Market Commission, IFM It monopolizes up to 12.04 percent of Naturgy’s share capital, which represents an increase of 1.21 percent achieved based on a constant purchase of shares from mid-October until now.

This interest in energy company securities has undoubtedly contributed to the rise in the value of the shares of the company led by Francisco Reynés, which closed the trading day on Monday at 28.4 euros.

The price of energy does not fall

Naturgy closed the first nine months of 2021 with a net profit until September of 777 million euros, which, although it fell short of consensus forecasts that pointed to 800 million, have not discouraged analysts.

In the last four weeks, the panel of experts has revised slightly upwards the predicted profits for Naturgy in all of 2021, placing the total figure at 1,169 million euros. They would represent an improvement of 13 percent compared to the 1,026 million euros collected in 2020.

“Naturgy has little chance of continuing to take advantage of high gas prices”


And in the same way that the company was favored by the increases in the prices of electricity and gas to explain its improvement in profit during the first nine months of the year, the last quarter has also been marked by a price of energy that it has not decreased in a context of high inflation, persistence of industrial bottlenecks, and geopolitical tensions around gas pipelines.

Analysts predict the end of these constants

In the eyes of analysts, however, both the IFM buying process and the escalation of energy prices should relax, leading to the stabilization of the Naturgy stock.

In the analysis of the values ​​of the Spanish company, Barclays indicates that Naturgy has offered the second best performance within the European energy companies, but lowers its recommendation to buy its shares given its “limited possibilities to continue taking advantage of the high prices of the gas “and” IFM’s role in its superior performance. “

The British financial institution therefore maintains a target price of 24.7 euros on the share that, although it is one of the most optimistic within the consensus, is well below the environment of 28 euros in which stocks are currently moving.

“Our downgrade takes into account what we consider to be a realistic scenario in which buying pressure leads to a certain temporary rise in the share price above our target price, which remains unchanged,” says Barclays in its report.

The bank considers, therefore, that the Naturgy rally will be momentary, a position that is repeated among some analysts who have not issued a single buy recommendation on the company’s securities, despite the fact that the current price of the share exceed the 12-month consensus price target, which remains at 22 euros.