European Utilities & Renewables Outlook 2H25: Stock picking in calmer waters? [Correction]

Research evidence excerpt

7 October 2025

European Utilities & Renewables

Equities

Multi-Utilities

Outlook 2H25: Stock picking in calmer waters?

[Correction]

Europe

◆ Calmer waters? Focus could turn to stock picking versus

thematic ideas in 2H 2025. Balance sheets remain in focus

◆ We prefer electric networks and selected renewables. We

downgrade Enel and Endesa to Hold; change TPs for E.ON,

RWE, EDP, EDPR, Centrica, SSE and Orsted

◆ Buy ratings: E.ON, Terna, National Grid, SSE, NextEra,

Iberdrola, EDP, EDPR, Veolia, and RWE

2H 2025 sector outlook – stock picking in calmer waters: We believe markets will

increase focus on company fundamentals versus thematic ideas.

Meike Becker*

Senior Global Utilities & Renewables Analyst

HSBC Bank plc

Charles Swabey*

Global Utilities & Renewables Analyst

HSBC Bank plc

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

Macro, corporate action and policy outlook: 1. Balance sheet and consolidation questions

are set to rise with benchmark dividend yields at 6-7%. The sector will likely continue to

bifurcate into income versus growth, and financing questions. 2. One-to-two-year power prices

have settled and trade range-bound. Market volatility excess margins have normalised, while

Retail margins remain resilient. 3. After the One Big Beautiful Bill Act (OBBB), US energy policy

for onshore renewables offers more visibility, while European policy lens turns to French

elections. 4. Our fixed income team expect stable or slightly lower yields for sovereign bonds. 5.

We expect attractive US electricity demand growth (albeit more muted than most bullish

outlooks), while Europe trims demand outlooks with lower green hydrogen and industry

demand as well as slower building decarbonisation.

Segments outlook: 1. Electric networks were revalued in 2025 but still offer upside, with

potential upcoming catalysts in Spain, the UK and Germany. 2. Electric Integrateds set income

benchmark or offer network growth with selective renewables. 3. Renewables turned a corner

in the summer of 2025 with fewer headwinds, margin upside in US and a growing storage

market. UK AR7 is a catalyst for offshore.…