Itaú BBA raised its price target for Equatorial Energia (EQTL3) to R$59.30 per share from R$53.30, implying a 63.1% upside from the Friday close of R$35.77. The upgrade reflects the bank's view that the market is underestimating the value created by the company's capital allocation strategy and regulatory tailwinds in Brazil's utilities sector.
The new target incorporates a sum-of-the-parts valuation that assigns R$13.80 per share to Equatorial's 15% stake in Sabesp (SBSP3), R$7.50 per share to its 30% stake in Copasa (CSMSG3/CSMG3), and R$30.90 per share to its energy distribution assets in Pará, Maranhão, and Goiás. The bank estimates the company's fair value at R$59.30 under a scenario where the Selic rate reaches 10.8% and the cost of equity is 10% in 2029, while a 2 percentage point increase in both metrics would reduce the valuation to R$45.2 billion.
Equatorial's sanitation stakes are valued at discounts of 28% for Sabesp and 34% for Copasa relative to Itaú BBA's model prices of R$12.5 billion and R$6.2 billion, respectively. The energy distribution portfolio is trading at a 36% discount to pre-acquisition levels, despite projected EBITDA growth from R$11.97 billion in 2026 to R$18.96 billion in 2030 under a constructive regulatory scenario. The bank notes a 17% EBITDA difference between non-regulatory and constructive scenarios by 2030.
The Copasa acquisition, completed in June 2026 for R$5.6 billion, increased Equatorial's consolidated leverage by approximately 0.3x. The pro forma regulatory asset base (RAB) for 2026 is estimated at R$74.3 billion, with energy distributors accounting for R$52.3 billion, Sabesp's proportional stake at R$16.3 billion, and Copasa's at R$5.8 billion. Regulatory EBITDA contributions are projected to rise from R$499.2 million in 2027 to R$2.75 billion in 2030, supporting a 0.8x leverage reduction over the period.
Equatorial's equity income from sanitation is expected to grow from R$920 million in 2026 to R$2.44 billion in 2030, while net income (after minorities) is revised upward by 42% to R$2.682 billion for 2026 and 12% to R$2.875 billion for 2027. Net revenue (excluding construction) for 2026 is adjusted by 7% to R$41.31 billion. The stock has declined 12.7% over the past month and lags the Ibovespa by 20.8% over the last 12 months, trading near the bottom of its 52-week range of R$33.61–R$46.32.
