Risk Reward Update

Research evidence excerpt

Risk Reward Update

'25 DEC '25 JUN '26 JUN '27

Key: Historical Stock Performance Current Stock Price Price Target

Source: Refinitiv, Morgan Stanley Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull,

Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 30

Jun 2026. All figures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either

three-months’ or one-years’ time. View explanation of Options Probabilities methodology here

BULL CASE €11.00 BASE CASE €9.20 BEAR CASE €7.50

Further value realisation Undemanding valuation with attractive Market focuses only on core businesses

dividend

We assume higher growth for Networks and Our bear case assumes the market pays for

renewables, increasing our target group EV We value ENEL on a DCF-based SOTP, with terminal value only in DM Networks with no

by 11%. We also assume higher EV/EBITDA business-specific WACCs for unlisted assets, TV elsewhere along with ~10% discount to

multiples for Italian Thermal to reflect including terminal value for Networks & retail & network businesses. In this scenario,

market willingness to value higher power Renewables. We value Endesa and Latam EV is €20bn/11% below our base case. Bear

prices with profitability being sustained at subsidiaries at current prices. Group average case implies 2027 P/E of 11x.

higher levels for longer, along with WACC is 8.5%, with Italian valuation

Renewables to represent greater confidence anchored on a 3.6% risk-free rate, in line

in execution on strategy. This implies 2027 with Italian 10Y bond yield. This gives

P/E of 16x. business WACCs for Networks 4.3%, Wind &

Solar 6.4%, Hydro 7.6%, Thermal 6.7%, Retail