Verbund shares rise 3% after Deutsche Bank upgrade to Hold

Verbund shares edged up 3.2% to €64.58 on Monday after Deutsche Bank raised its rating to "Hold" and lifted the price target to €60, up from €55. The upgrade comes after Deutsche Bank had held a "Sell" rating on the Austrian utility since 2024. The stock had ended at €62.55 on Friday.

Analyst Olly Jeffery cited a surge in European power prices, which he believes will more than counterbalance any negative impact from a profit warning Deutsche Bank anticipates from the company this year. Jeffery also highlighted the recent questioning of the validity of Austria's profit levy by the Constitutional Court, with a ruling expected by the end of the year.

Deutsche Bank noted that Verbund had lagged the sector by roughly 65% since January 2024 and by about 6% on an annual basis. The analyst's revised outlook is driven by expectations that higher power prices will bolster Verbund's medium-term earnings, even if near-term results may be weaker. Verbund is Austria's largest electricity producer, with a generation portfolio heavily reliant on hydropower, making wholesale electricity prices a key driver of its earnings.