UK Utilities: Focus on Fundamentals

Research evidence excerpt

UK Utilities: Focus on Fundamentals

Foundation

June 15, 2026 04:12 AM GMT

Morgan Stanley & Co. International plc+MUK Utilities | Europe Robert Pulleyn

Equity Analyst and Commodity Strategist

Focus on Fundamentals Robert.Pulleyn@morganstanley.comSarah E Lester, CFA +44 20 7425-4388

Equity Analyst

Sarah.Lester@morganstanley.com +44 20 7425-0551

Recent stock weakness on policy and macro uncertainty offers Bruna Skarica

an attractive buying opportunity for UK Utility stocks. We see ChiefBruna.Skarica@morganstanley.comUK Economist +44 20 7425-9110

attractive fundamental growth stories trading at undemanding Morgan Stanley Europe S.E., Paris Branch+

levels after weakness, with low risk of industry, market or policy Arthur Sitbon, CFA

change. We would look to buy NG, SSE and PNN. Arthur.Sitbon@morganstanley.com +33 1 42 90 71-03

Morgan Stanley & Co. International plc+

Key Takeaways Marina Fuentes Juan

Research Associate

We see structural growth story as intact for UK Utilities with support from mega- Marina.Fuentes.Juan@morganstanley.com +44 20 7425-2268

themes of Critical Infrastructure (inc Energy Security), PoweringAI and HALO.

Utilities

We do not expect dramatic changes to the Utility industry, market design, Europe

ownership and/or policies and would separate politics from policy in headlines. Industry View Attractive

We see greater risk around bond yields given long duration Utility stocks, yet MS

forecasts declines to 4.5% by end 2026 & 4.3% end 2027.

We recognise timing is key for new buyers amidst current uncertain backdrop, yet

with UK Utilities -14% in 2 months we see negatives, which may not ultimately

occur, as priced in.

We prefer NG, SSE, PNN at undemanding valuations for double-digit EPS growth

stories 2025-30 and mid teen TSRs.