Why is EDP Energias de Portugal stock rallying today?

EDP Energias de Portugal stock experienced a notable increase of 3.2%, trading at €4.66 today. Bank of America (BofA) played a significant role in this rally, as the bank upgraded the Portuguese utility's stock from "underperform" to "buy." BofA cited EDP's positive outlook on its 2028 guidance as the primary reason for this change.

The broker noted that EDP had already revised its guidance for 2026 twice this year, and now exceeds both 2028 guidance and current pre-results expectations. Management's commitment to a strategic upgrade before the second quarter of 2027 further bolstered BofA's bullish view. The bank's updated estimates for EDP's net income in 2027-28 show a 15% increase over pre-results consensus and are €200 million higher than current guidance.

However, BofA maintained its "underperform" rating on EDP Renováveis, the company's renewable energy unit, citing valuation concerns due to anticipated EBITDA fluctuations resulting from capital gains and perimeter changes. The broader market context also played a role, with the Portuguese PSI benchmark displaying resilience in recent sessions, with utilities being among the leading sector contributors.

Despite global equity sentiment being mixed, particularly with U.S. technology indices under pressure, EDP's defensive utility profile and rapid growth in renewable energy help protect it from these market dynamics.