National Grid Updates Performance Expectation

Investing.com — In its pre-close update for the six months ending September 30, National Grid (NYSE:NGG) (LON:NG) indicated that the group’s performance aligns with expectations, with underlying EPS anticipated to be weighted to the second half of the year.

Citi Research downgraded NG shares to Neutral, setting a revised price target at 1,050p (from 985p). Analysts expressed willingness to re-enter the shares in case of an unjustified sell-off, citing strong fundamentals.

For its UK operations, encompassing Electricity Transmission and Electricity Distribution, National Grid forecasts that operating profits will be evenly distributed throughout the year. The company also flagged a projected £70 million boost from the Electricity System Operator (ESO) business, attributed to accounting adjustments related to its classification as held-for-sale until the end of September.

Citi noted that in relative terms, better value can be found in other regulated names within the sector, such as E.On or Redeia, both rated as Buy. In the US regulated sectors, including New York operations, National Grid expects operating profits to also be weighted more toward the second half, in line with historical trends. This follows a return to typical performance after the previous year’s first half was affected by an environmental provision charge.

For National Grid Ventures, the company projects a 40:60 split in operating profit between the first and second halves of the fiscal year, while interest costs are expected to be evenly distributed throughout. Additionally, National Grid noted that the weighted average number of shares for the first half stands at 4,526 million, reflecting the impact of its recent rights issue on both net debt and issued share capital.

Jefferies analysts commented, “Overall, we see this as an in-line update and assume the long-term outlook remains unchanged.”