Equities Energy

Enel shares fall as Goldman loses faith in the Italian energy provider

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Enel shares are lower Friday as investment bank Goldman Sachs analysts have removed the Italian major from its convictions list of recommended stocks. The move comes as the likely new 5-Star and League coalition Government discusses its policy plans for the country.

By 1310 BST, ENEL shares were 1.77% lower at €4.90. The stock has been on a downward trend for the past couple of weeks.

Political change could hit Enel

It’s thought that the coalition’s energy policy could prove bad news for Enel. Both parties who are poised to form a governing coalition in Italy after two months of fruitless discussion are both supporters of greener energy policies.

They are reportedly planning on pushing for greater investment in renewable energy. And, while the US bank admits that could be a positive in many ways, it will also likely hurt Enel as it could lead to lower energy prices in the country.

“The plans presented by M5S/Lega could be deflationary in our view as it would lower power bills by around 15%, we estimate,” Goldman’s US analysts wrote in a note.

However, despite removing Enel from its list of preferred stocks, Goldman kept its ‘Buy’ recommendation on the stock.

Enel’s green credentials

Despite Goldman Sachs’ reservations over the potential impact of the likely new Italian government, that suport for renewable energy isn’t something that will necessarily prove bad news for Enel.

While it is a utilities company that has some reliance on the prices it can charge its customers, it is also working towards improving its own green credentials.

Enel Green Energy is part of the Enel Group dedicated to the development and management of green energy in Italy and on a global scale.

Indeed, earlier this month Enel Green Power announced it had joined Europe’s OSMOSE renewable energies project.

Enel will take part in trials at its Potenza Pietragalla wind farm and the San Fiorano pumped-storage hydropower plant to help discover improved, greener solutions to the provision of electricity.

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