Citigroup Downgrades Enel Chile to Neutral from Buy Rating

Citigroup Downgrades Enel Chile to Neutral from Buy Rating

Investment bank Citi has revised its outlook on Enel Chile (ENIC, Financial), lowering the rating from 'Buy' to 'Neutral'. The updated price target for the stock is set at CLP 71 [1]. This change reflects Citi's re-evaluation of the company's future prospects and financial performance.

According to the latest financial data, the average target price for Enel Chile SA (ENIC, Financial) is $3.68, with a high estimate of $4.02 and a low estimate of $3.24. The consensus recommendation from 3 brokerage firms is an average rating of 2.0, indicating an "Outperform" status [1]. GuruFocus estimates the GF Value for Enel Chile SA in one year to be $2.57, suggesting a potential downside of 23.51% from the current price of $3.36 [1].

Enel Chile SA has had a mixed year. The company successfully achieved the commercial operation date for the Los Condores power plant, adding significant capacity to its portfolio. Additionally, it has a strong and diversified portfolio with 88% of its capacity coming from renewable energy sources and battery energy storage systems. The company reported a strong start to the year with solid EBITDA and net income levels, reinforcing confidence in its strategic plan [1].

However, Enel Chile SA faces several challenges. Net electricity generation decreased by 8% compared to the previous year, primarily due to lower hydro and renewable generation. Energy sales saw a 9% reduction compared to the previous year, attributed to lower state-regulated costs and the expiration of regulated contracts. The company also faces challenges from transmission line restrictions and lower water availability, impacting its operations. There is uncertainty regarding the impact of new regulatory changes, particularly concerning ancillary services and CO2 taxes [1].

Enel Chile SA maintains a competitive average cost of debt at 2.9%, supporting its financial stability. The company has implemented a resilience plan to strengthen grid infrastructure against increasing climate risks. The maintenance of solar plants and network restrictions following a blackout have contributed to operational challenges [1].

References:

[1] https://www.gurufocus.com/news/2986878/enel-chile-enic-receives-downgrade-from-citi-enic-stock-news