Deutsche Bank Cuts National Grid Share Rating Amid Political Uncertainty

Deutsche Bank downgraded National Grid (LON: NG.) shares to Hold from Buy on Monday, cutting its price target to 1,250 pence from 1,370 pence, citing political risk tied to a potential Labour leadership change and stretched valuation.

While government policy has remained broadly supportive for UK utilities, Deutsche Bank flagged that prediction markets are pricing in a high probability of a new Labour prime minister being selected this year.

The bank pointed to Andy Burnham, the current frontrunner, whose advocacy for stronger public control of UK water and energy utilities introduces a degree of uncertainty for sector investors.

Valuation also weighed on the call, with Deutsche Bank noting that National Grid trades at a significant premium after adjusting for its extra “fast money” allowances, suggesting limited room for further upside at current levels.

The downgrade adds to some recent rating cuts on the stock. Goldman Sachs moved National Grid to Neutral from Buy in March, citing more limited upside following a sharp rally, while Jefferies also downgraded to Hold that same month, noting that the stock’s regulatory catalyst lineup for the remainder of the year “appears thin.”

National Grid shares slipped 1.2% on Monday following the Deutsche Bank note. Despite the move, the stock remains up 5.7% year-to-date and has gained 15.7% over the past 12 months.

According to TradingView data, the consensus price target among 14 analysts polled is 1,369 pence, representing a potential 13.9% upside from current levels.