Goldman Sachs on Monday reduced its recommendation on Elia (EBR:ELI) to neutral from buy, while nudging up its 12-month price objective to €150 from €145. The move follows a 46% surge in Elia's shares since the company was added to Goldman’s Buy List on June 16, 2025 - a performance the firm contrasted with a 13% rise in the FTSE World Europe index over the same period.
"Following YTD strong share performance, we believe a meaningful re-rating from here would likely require additional colour on growth and funding visibility beyond 2028, leaving limited upside at current levels," Goldman analysts wrote.
Goldman set out an outlook that anticipates significant investment and earnings expansion but also flags material funding and cash flow dynamics. Elia’s current public plan calls for roughly €27 billion of investment in Belgian and German power networks across 2025-28, a sum that is about double the company’s current market capitalisation of €14.9 billion.
Under Goldman’s modelling, regulated asset base (RAB) grows at an average annual rate of about 20% over 2025-28, approaching €40 billion by the end of 2028. That RAB expansion underpins an expected EPS compound annual growth rate of 15% from 2025 through 2028, which Goldman notes would be the fastest pace among the regulated utilities it covers.
Goldman projects Elia’s earnings per share to increase from €5.85 in 2025 to €6.66 in 2026, €7.49 in 2027 and €8.82 in 2028, with a further rise to €11.30 in 2029. The brokerage highlights an 18% EPS compound annual growth rate across 2025-29. Compared with its prior forecasts, Goldman has lifted EPS estimates by 1.2% for 2026, 6.8% for 2027 and 6.5% for 2028, citing higher Belgian allowed returns from 2028, a capex profile that peaks around 2030 before gradually normalising, and a slightly lower assumed cost of debt.
Beyond 2029, Goldman expects EPS growth to moderate - stepping down to about +6% per year through 2035, broadly tracking peers in the regulated utility sector. The brokerage’s base-case scenario assumes peak annual capex near €7.5 billion in 2028-30, with average annual capex for 2031-35 roughly 15% below that peak.
Goldman’s cash flow and leverage projections underline the financing challenge implied by the investment programme. Free cash flow is forecast to be negative by roughly €4-5 billion per year over the medium term. Proforma funds from operations (FFO)-to-net debt is projected at 8.1% in 2026 and to remain within an 8-9% range through the forecast horizon, above a stated 7% floor.
On valuation, Goldman provides two approaches. A sum-of-the-parts (SOTP) valuation implies a share value of €159, while a P/E-based methodology points to €144 per share. The final €150 target represents an equal weighting of those two valuation approaches.
Operational earnings and leverage metrics cited by Goldman include EBITDA of €2.41 billion in 2026, rising to €2.93 billion in 2027 and €3.50 billion in 2028. The firm reports an EV/EBITDA multiple of 13.9x for 2026 and a net debt/EBITDA ratio of 7.7x in 2026. Free cash flow yield is shown as negative 34.1% in 2026 and negative 29.2% in 2027 under the bank’s scenarios.
The downgrade signals that, while Goldman expects rapid RAB expansion and above-peer EPS growth over the near term, the stock’s recent rally and remaining uncertainty around funding and growth after 2028 constrain further upside at current prices.
Impacted sectors - The analysis primarily touches the regulated utilities and energy-infrastructure segments, while funding and valuation dynamics also bear relevance for capital markets and infrastructure financing.