Bernstein analysts have raised their rating for National Grid (LON: NG.) to Outperform, projecting a potential 17% upside in the company’s share price from Friday’s close.
The firm told investors in a note that it sees significant growth potential, leading to a new price target of 1,120p, up from 1,040p.
On Friday, the company’s shares closed at 966.2p. At the time of writing on Tuesday, it is trading around the 972.8p mark.
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According to Bernstein, National Grid has been undervalued compared to its peers.
“Despite its US peers seeing a re-rating over the past year, NG (which has c.50% of its assets in the US) has not re-rated and continues to trade at a discount to European regulated network peers,” the firm states.
Given that roughly 50% of National Grid’s assets are in the US, Bernstein believes the discount is unwarranted.
“Considering its growth, visibility and returns, we see no reason for the US business to trade at a discount,” the analyst asserts.
Furthermore, Bernstein highlights the attractiveness of National Grid’s UK operations. The firm points to “significant growth and a very constructive regulatory backdrop” in the UK.
This dual strength in both the U.S. and U.K. markets reinforces Bernstein’s positive outlook.
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