First Read: RWE "Q1 2026 in line. Very weak trading offset by a one off" (Buy)

Research evidence excerpt

First Read: RWE "Q1 2026 in line. Very weak trading offset by a one off" (Buy)

Forecast returns

Forecast price appreciation 11.6%

Forecast dividend yield 2.3%

Forecast stock return 14.0%

Market return assumption 7.7%

Forecast excess return 6.3%

Company Description

RWE has become one of the leading renewable developers worldwide following a series of

transformations over recent years. Renewables are now the core activity of the group.

However, the wider business comprises a range of other activities, including conventional,

flexible generation (including gas plants), a significant supply and trading activity, and a

legacy brown coal (lignite) operation in the Rheinland. The lignite operations are due to close

by the late 2030s under an agreement with the government, and the company's last nuclear

plant closed in March 2023.

Valuation Method and Risk Statement

The main drivers of the Utilities sector include: commodities, generation margins, demand

evolution, regulatory changes, M&A, regulation, government policy, credit conditions and

currency movements. Any adverse change in these would modify our view on these stocks.

Company-specific risks for RWE also include delays to construction of new renewable projects

including potential cost overrun; supply chain and pricing pressures in renewables (which can

lead to project impairments, as evidenced at some RWE competitors); continued inflation in

capex without an uplift in revenue leading to lower renewable returns or lack of supportive

regulation for new technologies meaning RWE misses capex targets in flexible generation.

Our RWE price target is derived from a sum of the parts approach cross-checked with relative

multiples.

First Read: RWE 13 May 2026 ab 2