EDP rises after raising outlook again on networks-led earnings strength

Investing.com -- Shares in EDP Energias de Portugal traded higher on Friday after the Portuguese utility raised its full-year earnings outlook for the second time in 2026, beating analyst estimates on operating profit.

First-half earnings before interest, tax, depreciation and amortisation came in at €2.75 billion, beating the consensus average of €2.63 billion by 4% and topping Bernstein’s estimate of €2.70 billion by 2%, helped by a 14% jump in electricity network earnings as new Iberian regulatory frameworks took effect.

Net profit rose 3% year-on-year to €732 million, beating the consensus average of €712 million, though it fell 4% short of Bernstein’s estimate of €765 million.

Bernstein attributed the more subdued net profit outcome to higher depreciation driven by capacity additions including €60 million of non-recurring items, partially offset by a lower effective tax rate and higher minorities.

EDP now expects full-year recurring EBITDA of about €5.3 billion, raised from a previous target of €5.2 billion and above the consensus average of €5.18 billion and Bernstein’s estimate of €5.24 billion.

The full-year recurring net profit target was raised to about €1.4 billion from €1.3 billion, ahead of the consensus average of €1.31 billion and Bernstein’s €1.37 billion.

Chief executive Miguel Stilwell d’Andrade said the group was "performing very well across its core platforms," adding "all in all, this guidance upgrade showcases, I think once again, the quality of our business plan execution across all of the different business lines."

Electricity networks was the standout segment, with EBITDA of €872 million, up 14% year-on-year and 3% ahead of Bernstein’s forecast of €844 million, reflecting new regulatory periods in Portugal and Spain and growth in Brazil.

Renewables EBITDA rose 12% to €1.06 billion, 3% above Bernstein’s estimate of €1.03 billion, boosted by higher asset rotation gains and U.S. capacity additions.

FlexGen and Clients was the only laggard, with EBITDA falling 6% to €800 million and coming in 2% below Bernstein’s estimate of €820 million, hit by lower hydro volumes following an exceptionally strong 2025 and a 19% decline in Spanish average pool prices year-on-year.

Bernstein, which rates the stock “outperform” with a price target of €5.30, said the second guidance upgrade of the year "reinforces confidence in EDP’s ability to deliver earnings growth in 2026," adding that "the upgraded outlook is driven by all businesses, highlighting operational strength."

Net debt stood at €17.0 billion at June 30, up from €15.4 billion at year-end 2025, with the company targeting a reduction to about €16 billion by year-end as asset rotation and tax equity proceeds are expected in the second half.

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