Raising fair value estimate for National Grid by 14% to $74, positive.
From Morningstar: 2025-06-24 05:35:00
Morningstar Equity Research has raised the fair value estimate for National Grid by 14% to $74 due to higher earnings and returns forecasted for fiscal 2025 and the upcoming RIIO-T3 regulatory period. EPS is expected to grow by 2.6% in fiscal 2026, falling short of the group’s guidance due to US dollar depreciation.
Bulls believe the UK regulatory environment favors National Grid, with potential for increased returns under RIIO-T3 and a clear strategic plan. Bears point to dilutive capital allocation, negative exposure to US dollar depreciation, and continued use of a dilutive scrip scheme for dividends.
National Grid owns and operates energy networks in the US and UK. The firm anticipates a 200-basis-point increase in the real cost of equity for the RIIO-T3 period. After high investments in the US, National Grid reshuffled assets to focus on electricity networks, aiming for growth in the energy transition. A five-year strategic plan calls for increased investments, funded by a rights issue and asset disposals, to drive growth in regulated assets and EPS by 2029. 1. The stock market experienced a sharp decline today, with the S&P 500 falling by 2%. This was the largest single-day drop in over a year, as concerns over rising inflation and interest rates continue to weigh on investors.
2. The latest employment report showed that the economy added 200,000 jobs in the month of March, slightly below expectations. The unemployment rate remains at 3.8%, highlighting the ongoing strength of the labor market despite some signs of slowing growth.
3. A new study revealed that 87% of Americans now own a smartphone, up from 81% in 2019. This increase is driven by older adults adopting smartphones at a faster rate, with 74% of those aged 50-64 now owning one.
4. The United Nations announced that global food prices have reached their highest level in a decade, with the cost of food rising by 4.8% in March alone. This increase is due to a combination of factors, including supply chain disruptions and extreme weather events.
Read more at Morningstar: Raising Our Fair Value Estimate for National Grid