Saturday, February 24

The Villarejo case drags Iberdrola into its worst year in a decade

Iberdrola shares have lost around 12 percent in the last year and are heading to sign the worst year on the stock market in almost a decade.

We would have to go back to 2012 to see such poor stock market behavior in the electricity company, which has more than paid for the imputation of its president, Ignacio Sánchez Galán, in the case Villarejo.

It is true that there were other negative factors, such as regulatory uncertainty due to the hack of the remuneration of the electricity companies, but the sources consulted by insist that the noise generated by the ex-commissioner is one of the most negative elements for Iberdrola.

In fact, the case Villarejo It overturned the purchase of the American company PNM Resources, which was set to be Iberdrola’s largest international acquisition. And he even put in solfa the strategic plan of the electric company.

The alleged orders that Iberdrola made to the company Cenite, linked to Villarejo, will seat Sánchez Galán before the judge as a defendant as of January 18, according to Digital Economy reported.

It is the scenario that the manager tried to avoid at all costs.

The conduct of Sánchez Galán, a burden for Iberdrola

The rejection of the purchase of PNM Resources put the icing on a fateful year for the electricity company. It is true that Iberdrola can appeal the decision before the Supreme Court of New Mexico, But the damage is already done. And there is not much margin for the electric one either.

“Some of the concerns raised by the commissioner regarding conduct issues are beyond management’s control. We refer to the hearing in a Spanish court that will involve the president on January 18 in relation to the conduct issues, ”said the Barclays analysts.

It cannot be denied that regulatory changes have had an impact on the entire sector. However, a factor that “has negatively affected is Galán’s imputation in the Villarejo case,” agreed Manuel Pinto, an analyst at XTB.

The external noise of the imputation of Prince It is an important factor because the company is not only investing in the United States, but in other countries such as Australia, Pinto recalled.

On the other hand, this “reputational uncertainty” could affect Iberdrola’s presence in ESG portfolios, Bankinter analysts added.

As already reported Even before the rejection of the PNM Resources purchase occurred, the Villarejo case hampered Iberdrola’s growth in the United States. The links with the ex-commissioner are too heavy a slab.

Slight recovery after stopping the hack to the electrics

Iberdrola’s stock market misstep could have been much greater if the Government had decided to go ahead with the hack of the profits of the electricity companies.

But the change in the speech of the Executive with the tariffs, that was known in the middle of October, made that the investors soften the downward pressure.

The utility was able to reiterate its profit guidance given the evidence that the regulatory impact was going to be less than expected.

However, Iberdrola was already late to turn the stock market year around, as the electricity company accumulated a penalty at the end of October of 26 percent, with all the regulatory problems and the noise generated by the Villarejo case.

“It is not the right partner at this critical time in our energy transition,” he said. Stephen Fischmann, chairman of the commission that rejected the purchase of PNM Resources.

It’s normal for regulators to comment before a big deal. But what is absolutely exceptional is that they refer to the profile of the buying company in their comments, insist the sources consulted.

Bounce options for Iberdrola

The sources consulted explained that the electricity company faces 2022 with some rebound options, since its technical perspectives are not as bad as the fundamental ones.

After the large falls in August and September, which brought the price to 8.6 euros, a recovery in the price has been seen.

In this way, “the downward trend since the end of October has already been broken upward with the exceeding 10 euros per share,” said Pinto.

Thus, the stock is leaving a projection to reach the first resistance levels around 10.35 euros, which is the objective towards which Iberdrola is aiming.

And after this area, it would have in its sights 11 euros, added the XTB expert.