Jefferies has upgraded its outlook on European utilities, citing stronger-than-expected power prices and upcoming regulatory support as key catalysts for sector outperformance.
The brokerage named RWE as its top power play, citing a projected double-digit compound annual growth rate in earnings per share stretching into the early 2030s. The upgrade is underpinned by sustained strength in European power prices, driven by elevated natural gas costs, tighter storage levels, and improving demand dynamics. RWE’s growth trajectory is further supported by its expanding renewable energy portfolio and strategic positioning in the transitioning energy market.
E.ON was designated as the top regulated utility pick, with analysts pointing to near-term upside potential following its first-half performance. The brokerage expects Germany’s upcoming Network Development Plans (NAP 2026), slated for publication in October, to trigger a meaningful upgrade to E.ON’s German grid capital expenditure outlook. This regulatory tailwind is anticipated to accelerate growth in the company’s regulated asset base (RAB) and earnings, providing a structural boost to its valuation.
EDP was selected as the top integrated utility, combining strong exposure to rising power prices with accelerating network growth at an attractive valuation. The company’s integrated business model—spanning generation, distribution, and retail—positions it to benefit from both higher wholesale power prices and expanding regulated infrastructure investments. Jefferies highlighted EDP’s valuation as particularly compelling relative to peers, reinforcing its recommendation.
The brokerage’s bullish stance contrasts with recent share price corrections in the sector, which Jefferies argues have left valuations undervalued amid improving medium-term earnings prospects. The upgrade reflects a broader shift in sentiment as European utilities benefit from a supportive regulatory environment and sustained power price strength.
