Shares in Elia Group moved higher on Wednesday after UBS shifted its recommendation on the Belgian electricity transmission operator from neutral to buy and lifted its 12-month price target to €147 from €142. The broker argued that the near-term market reaction to the company’s first-half results did not justify the scale of the stock’s decline.
UBS noted the stock had fallen about 8% since Elia reported first-half results on July 29, a performance that lagged the wider European utilities sector by over 700 basis points. Investors had responded to a combination of a first-half earnings miss, a €0.3 billion, or roughly 4%, reduction in capital expenditure for 2026, and unchanged group net income guidance despite an upgrade in guidance at a divisional level.
In its reassessment, UBS said the 2026 capex reduction appeared to reflect timing considerations rather than any deterioration of Elia’s underlying investment programme. The broker highlighted management’s conservative approach to 2026 guidance and maintained its longer-term view that Elia’s investment profile remains robust.
UBS reaffirmed its expectation that Elia will invest about €32 billion in capital expenditure across 2024-2028. That investment profile underpins the broker’s forecast of roughly 12% compound annual growth in earnings per share between 2025 and 2030, a pace UBS notes is roughly double that of peers.
The firm raised its earnings-per-share estimates for 2026 through 2029 by between 2% and 3%. UBS said this uplift reflected stronger anticipated earnings from Elia’s non-regulated businesses and contributions from the Nemo Link interconnector. The higher price target was driven principally by assumptions of greater capital expenditure after 2029 and improved earnings from non-regulated operations.
UBS also emphasized that the 2026 trimming of capex represents only about 1% of planned investment for the 2024-2028 period. The broker pointed out that Elia has already expanded annual capital expenditure to €5.2 billion in 2025, up from €1.6 billion in 2022. Citing comments from Elia’s chief financial officer, UBS noted that capital spending in Germany is not expected to fall beyond 2028.
Looking further ahead, UBS now assumes capital expenditure beyond 2029 will remain broadly in line with 2028 levels. The broker added that Germany’s electricity transmission network is among the fastest-growing in Europe and will likely require additional funding over time.
On valuation, UBS calculated that Elia is trading at a 33% premium to its spot regulated asset base, below the company’s long-term average premium of 36%. The broker viewed the current premium as an attractive entry point given the firm’s projected earnings growth and anticipated expansion of regulated assets. UBS’s new price target implies around 17% upside from Elia’s €125.50 closing price on Aug. 3.
Market context - The upgrade and target increase by UBS aim to counter a post-results market reaction driven by short-term concerns. UBS’s analysis focuses on capital expenditure timing, non-regulated earnings contributions, and long-term investment needs in fast-growing transmission markets such as Germany.