National Grid (LON:NG) continues to post solid performance despite a ‘small reduction’ in the return on equity, analysts at Jefferies have said. The comments came as the grid operator updated investors on its full-year performance yesterday, posting a rise in annual profits but flagging lower earnings going forward.
National Grid’s share price has advanced in London this morning, having added 0.46 percent to 1,054.37p as of 09:24 BST, largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently standing 0.40 percent higher at 7,465.82 points. The group’s shares have added more than eight percent to their value over the past year, and are up by just under 11 percent in the year-to-date.
Jefferies reiterated its ‘hold’ recommendation on National Grid yesterday, with a price target of 950p on the stock. The move came after the FTSE 100 company revealed that its operating profit had climbed 14 percent to £4.67 billion in the year ended March 31. The grid operator further raised its dividend by 2.1 percent to 44.27p.
Citywire quoted the bank’s analyst Ahmed Farman as commenting that the outlook for group profits in 2017/18 ‘remains stable’ and that returns in the US business were expected to improve, although the benefits would be offset by timing effects.
“Despite seeing a small reduction in the return on equity, National Grid has delivered another year of solid financial performance,” he pointed out.
National Grid, however, also cautioned yesterday that it expects its earnings per share to decline after selling its natural gas distribution business.
JPMorgan Chase & Co reiterated its ‘overweight’ rating on the FTSE 100 company today, with a price target of 1,100p on the stock, while Barclays continues to see National Grid as an ‘equal weight,’ valuing the shares at 1,075p.