Deutsche Bank upgrades Verbund stock on higher power prices

Deutsche Bank has upgraded Verbund AG's stock rating from Sell to Hold and increased its price target to EUR60.00 from EUR55.00. Their decision is based on the expectation of higher medium-term power prices, which they believe outweigh an anticipated profit warning later in the year. The Austrian Constitutional Court recently questioned the validity of a profit levy, with a ruling expected by the end of the year.

Deutsche Bank has had Verbund rated as a Sell since 2024, a position it maintains despite the upgrade. Since January 2024, the stock has underperformed the sector by around 65% and by about 6% year-to-date. Currently trading at $14.21 with a price-to-earnings ratio of 18.72, InvestingPro analysis suggests the stock may be overvalued.

Net income is projected to decline this year, matching the expected profit warning, though the company maintains a 3.4% dividend yield, a result of 27 consecutive years of payments. The upgrade reflects Deutsche Bank's belief that rising power prices justify a more balanced view of the Austrian utility company. This report was AI-generated and reviewed by an editor.