EDPR. Goldman Sachs cuts price target, but maintains ‘buy’ recommendation

Goldman Sachs (GS) today announced a cut in the target price of EDP Renováveis ​​(EDPR) from 17.5 euros to 17 euros. The recommendation remains at ‘buy’.

EDP ​​Renováveis ​​announced on Thursday a cut of three billion euros in its net investment compared to what was foreseen in the strategic plan: seven billion euros. The company now plans to invest four billion euros over the next three years in net terms, 40% less than the initial plan.

The listed company continues to appreciate 2.16% to 14.66 euros in this Friday’s session on the Lisbon stock exchange.

“After 10 years of consistent Capex acceleration – and two capital increases – EDP changed its capital allocation to protect the balance sheet from increases in financing costs and the faster-than-expected decline in electricity prices. We believe that the market will welcome this strategic update as it makes a reset of financial and operational goals, focusing on projects with higher returns and more self-financed”, began by saying the North American bank in the note published today.

Recalling that Capex will fall from five gigawatts per year to three gigawatts per year, GS highlights that EBITDA for 2026 fell from three billion to 2.4 billion, with the profit target falling from 900 million to 700 million.

GS opinion? “We consider the new plan to be viable: our estimates for 2026 are above EDP’s estimates.”

Analysts highlight that the reduction in new capacity will allow EDP to focus on “higher return projects”. The company “sees a more competitive scenario (particularly in the US), thus supporting higher returns”, with emphasis on data centers and the electrification wave.

Until 2026, EDPR is planning to keep its financial debt stable at seven billion euros. “In other words, the plan appears to be self-sufficient in financing. This is possible due to the significant reduction in investments.”