Equity valuation Iberdrola, S.A.

Abstract

In the present days, the energy sector is a highly discussed subject for economic and social reasons simultaneously. Energy transition from fossil fuels to renewables energies, which the majority of nations and international organizations are establishing with measurable objectives, form the base of this. By setting a carbon neutrality target of 2050, both the European Union, the United States and so as other countries are implementing regulations that are common throughout the economy, with particular emphasis on the energy sector. With this said, this dissertation aims to analyze the factors that influence Iberdrola’s value which includes its risks, opportunities and drivers. The overall valuation of Iberdrola was therefore determined using two methods: DCF and a relative valuation based on a peer group. After taking into account both macroeconomic and microeconomic factors and assigning equal weight preponderance to both models, the dissertation has established a final target price of €12.66, as of October 31st, 2023. This price represents a potential upside of 21.97%. As a result, it is issued a BUY recommendation. The sensitivity analysis gives strength to these valuation in the sense that the upside scenario is greater than the downside one. Furthermore, a comparison was done between this dissertation and Barclays’ equity research, which also concludes its valuation with a buy recommendation.

Date of Award	9 May 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)