Endesa: Guidance upgrade ... and probably more to come - H1 26 first take

Research evidence excerpt

Endesa: Guidance upgrade ... and probably more to come - H1 26 first take

Javier Garrido AC Europe Equity Research

(34-91) 516-1557 29 July 2026 J P M O R G A N

javier.x.garrido@jpmorgan.com

Investment Thesis, Valuation and Risks

Endesa (Neutral; Price Target: €37.00)

Investment Thesis

Endesa growth capex should stay at relatively low levels, as investing in additional

renewable capacity in Spain faces meaningful challenges from an economic and/or from a

permitting point of view, while investments in networks should increase gradually, but not

reach their full potential due to regulatory obstacles. This should allow Endesa to generate

stable earnings in the medium term. With a robust FCF and an underleveraged balance sheet,

Endesa can afford to pay a substantial recurrent dividend, although the company is likely

to retain some headroom to address a potential acceleration in power demand growth in the

medium and/or long term.

Valuation

We value Endesa based on the average of an SOTP and a DDM valuation. Our SOTP is built

based on DCFs for the different Spanish businesses. Our DDM model discounts the

dividends of Endesa at a 9% cost of equity.

Risks to Rating and Price Target

We see the main risk on the downside in a materialization of a worst-case scenario in the

regulatory/political framework with the government deciding to intervene on power prices.

A less substantial, yet still relevant downside risk would emerge if renewable capacity

additions in Spain were to come faster than we assume, as this would result in a faster decline

in power prices than we currently expect.

Another source of downside risk would come from the crystallization of an even more

competitive environment in the electricity and gas sector than we are factoring into our

numbers.