National Grid PLC (LSE:NG.) has been upgraded to 'buy' (from neutral) by US bank Citi after weakness for the power distributor due to the macro uncertainty currently.
Citi says that Grid’s regulated asset value and earnings growth profile is largely underpinned by investments with political and regulatory support.
Given these strong fundamentals, the bank said it has no hesitation in ‘stepping back in’.
“In our view, the political and regulatory support remain robust as we head into RIIO ET3, as is NG's balance sheet.
“Furthermore, a combination of strong USD, re-rating of US regulated assets and Citi's house-view of second half interest rate cuts provide an attractive proposition for investors.”
A revised price target of 1,063p should close the gap that NG currently trades (15% RAB premium) vs its 30% long-term average.
'Buy' says the bank.