SSE PLC (LSE:SSE) is no longer a sell at Citi, but the US bank sees little to get excited about re the power group in the near term.
Shares are down 17% over the last three months, Citi notes, which it says reflects a mismatch between the valuation and the risk of balance sheet concerns, as well as potential risk around REMA/zonal pricing.
"Given the share price weakness, we believe some of these risks are now better reflected in the shares."
While SSE still needs to address its long-term funding structure (asset sales/hybrids/equity), the lack of immediate action given the pending change of management and ongoing RIIO ET3 review “is unlikely to deliver this clarity,” says the bank.
In addition, Citi says it awaits further government visibility on zonal pricing.
“Until these key questions are answered, along with progress to deliver 175-200p 2026/27 EPS, we struggle to see the shares moving meaningfully in either direction.”
A revised target price is 1,712p with ‘neutral’ now the view.
Shares were flat at 1,590p.