Deutsche Bank upgrades Iberdrola stock on higher power prices

Deutsche Bank raised its rating on Iberdrola SA stock to a Buy from Hold on Tuesday, raising its price target to EUR22.00 from EUR18.50. The bank attributes this upgrade to increased power prices and a stronger near-term growth outlook. Deutsche Bank now anticipates that Iberdrola's streak of double-digit earnings growth, which began in 2022, will persist until 2028.

The company's current P/E ratio of 25.13 is higher than its PEG ratio of 0.62, indicating that the stock may offer attractive value relative to its growth potential. While InvestingPro's analysis places Iberdrola on the Most Overvalued list based on Fair Value calculations, subscribers have access to 10 additional ProTips for a deeper understanding of the company's investment potential.

Deutsche Bank expects Iberdrola's 2026 guidance to be upgraded at the third-quarter results, with its March 2027 strategic plan update likely to be a positive catalyst. The bank predicts that medium-term consensus earnings could increase by approximately 10%. Although Iberdrola trades at a significant premium to its sector peers, its premium to direct competitors is at its lowest point in recent times.

Iberdrola is set to reveal a new strategic plan in March 2027, and its 2025-28 business plan could be extended to 2030. Deutsche Bank anticipates that adjusted net income growth guidance of 8% per annum over 2025-28 could rise to 10% per annum over 2025-30.