JPMorgan raised its recommendation on EDF to Underweight Overweight and revised its price target upwards from 7.6 to 12 euros. The broker does not see any signals announcing the end of the rise in electricity prices. This outbreak poses a problem for the French government because, under current regulations, it would lead to a 50% to 60% increase in prices next January, observes the research department.
The need to “re-regulate” is more urgent than ever, and the government has announced that it will nationalize EDF.
The broker believes this could be done through a takeover bid rather than legislation passed by Parliament. This means that minority shareholders could expect a bonus to help speed up the process.
The analyst estimates that, despite the current difficulties, a re-regulated EDF action should be worth 14 and 20 euros. An offer falling between the two could satisfy both parties, JPMorgan believes.