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PPC
Goldman Sachs raises its target price
Goldman Sachs raises its target price for PPC's shares to €15.5 from €14.5 previously, while upgrading its recommendation to buy from neutral.
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Georgios Stassis,CEO, PPC

Goldman Sachs raises its target price for PPC's shares to €15.5 from €14.5 previously, while upgrading its recommendation to buy from neutral. According to analysts, there are three reasons for this move:

  • First, due to the gradual transformation of PPC, with the additions of renewable energy and the expansion-upgrade of its network, which is expected to drive further growth
  • Second, due to the estimate of an average annual earnings per share growth of 20% by 2027, with growth from renewables and a partial level of protection from electricity price movements due to the vertically integrated nature of the business
  • Thirdly, it notes that it sees encouraging signs in the execution of the investment programme, with the planned RES additions supported by the mature backlog of projects and the plan to phase out the lignite units on track

INVESTMENTS

Analysts estimate that over the next three years PPC will invest around €7 billion, mainly to strengthen its presence in renewables and modernise/expand its electricity network. This, combined with the phasing out of lignite (underway), will push the weight of net operations to around 65% of EBITDA by 2027 (vs. around 50% in 2024). It will also turn PPC into an "Electrification Compounder", potentially supporting multiple expansion.

PROFIT

In terms of projected profitability growth, the aforementioned rate (20% on average) is similar to names operating purely in renewables - typically the fastest growing sub-segment of the space - with PPC having an additional advantage in times of commodity volatility.

RISKS

PPC's upside is not risk free, GS analysts explain, as failure to meet the targets the company has set will negatively impact earnings growth prospects. However, the house sees some encouraging signs, namely:

  • around 95% of the estimated additions to renewables for the period 2025-2027 are either under construction or ready for construction
  • the lignite phase-out plan appears to be progressing well, with less than half of the original equipment being retired
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